DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(4), CHENNAI, CHENNAI vs. RAMANATHAN VISWANATHAN, CHENNAI

आयकर अपीलीय अिधकरण, ‘ए’ �यायपीठ, चे�ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH: CHENNAI �ी एबी टी. वक�, �ाियक सद� एवं एवं एवं एवं �ी एस. आर. रघुनाथा, लेखा सद� के सम� BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI S.R.RAGHUNATHA, ACCOUNTANT MEMBER

आयकर अपील सं./ITA Nos.1321 to 1324/Chny/2025 िनधा�रण वष�/Assessment Years: 2014-15 to 2017-18

R. Viswanathan, v. The DCIT, Flat No.A-4, Central Circle-1(4), Rams Anjali Atrium No.8, Chennai. Sundaram Salai, R.A. Puram, Chennai-600 028. [PAN: ADLPV 6760 G]

(अपीलाथ�/Appellant) (��यथ�/Respondent) आयकर अपील सं./ITA Nos.1556 & 1597/Chny/2025 िनधा�रण वष�/Assessment Years: 2016-17 & 2015-16 v. The DCIT, R. Viswanathan, Central Circle-1(4), Flat No.A-4, Chennai. Rams Anjali Atrium No.8, Sundaram Salai, R.A. Puram, Chennai-600 028. [PAN: ADLPV 6760 G]

: (अपीलाथ�/Appellant) (��यथ�/Respondent)

अपीलाथ� की ओर से/ Assessee by : Shri. V. Naga Prasad, Advocate/AR ��थ� की ओर से /Department by : Smt. E. Pavuna Sundari, CIT/DR सुनवाईक�तारीख/Date of Hearing : 29.10.2025 / 17.11.2025

: घोषणाक�तारीख /Date of Pronouncement 22.01.2026

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 2 ::

O R D E R PER BENCH: These appeals preferred by the assessee and the Revenue arise

from the orders passed by the Learned Commissioner of Income Tax

(Appeals)-18 (hereinafter referred to as ‘Ld.CIT(A)‘), Chennai, dated

29.03.2025 for Assessment Years (hereinafter referred to as ‘AY’) 2014-

15 to 2017-18 u/s. 250 of the Income Tax Act, 1961 (hereinafter referred

to as ‘the Act’).

findings rendered by the lower authorities are verbatim same across all

these years and therefore, with the consent of both the parties, these

appeals were heard together and are being disposed of by this common

order.

132 of the Act upon the assessee on 12.09.2016, pursuant to which,

notice(s) u/s 153A of the Act were issued inter alias for AYs 2014-15 to

2017-18. In response, the assessee filed return(s) of income disclosing

the same income as originally returned u/s 139 of the Act. Thereafter, the

AO issued notice(s) u/s 142(1) of the Act dated 09.11.2018 calling for

several details and explanation wherein the assessee was inter alia

required to explain the contents of certain material which was seized in

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 3 ::

the course of earlier search conducted at third party premises, viz. M/s

Coastal Energy Group [in short ‘CEG’] and the statement(s) recorded from

various third parties which included Shri C P Anbunathan [in short ‘CPA’],

Shri Parasmal Lodha [in short ‘PLA’], Shri P Janakar [in short ‘PJR’], Shri

Giridharan [in short ‘Giri’] and Shri Sivakumar Singarvelu [in short ‘SSU’].

The assessee is noted to have furnished his detailed submissions, in

response to this notice. It has been brought to our notice that, since there

was no incriminating material whatsoever found in the course of search

conducted at the assessee’s premises, though notice(s) were issued u/s

153A of the Act, no addition(s)/disallowance(s) u/s 153A/143(3) of the

Act was made for AYs 2014-15 to 2017-18. Instead, it was shown to us

that, the AOs of Shri CPA, Shri Giri, M/s CEG & Shri PJR had recorded four

(4) satisfaction note(s) all dated 03.12.2018 asserting that, the seized

material found from the premises of these searched persons belonged to/

related to the assessee, basis which, the AO of the assessee recorded a

common satisfaction note for the AYs 2014-15 to 2017-18, all of which

(except AY 2017-18) were verbatim same, and initiated proceedings u/s

153C of the Act by issue of notice(s) all dated 03.12.2018. Having regard

to the seized material found from the premises and electronic devices of

Shri CPA, Shri PLA, Shri Giri, M/s CEG & Shri PJR and relying upon their

sworn statement(s), the AO completed the assessment(s) u/s 153C of the

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 4 ::

Act on 31.12.2018 after making addition on account of coal-commission

by way of ‘Income from Other Sources’ across all the years.

appeal(s) before the Ld. CIT(A) who confirmed the addition(s) made in AY

2017-18, enhanced the addition(s) in AY 2014-15, and allowed partial

relief in AYs 2015-16 and 2016-17. Being aggrieved by the order(s) of the

Ld. CIT(A), the assessee is in appeal before us in all the four (4)

impugned years and the Revenue has come up in appeal in AYs 2015-16

and 2016-17.

Naga Prasad, Advocate, appearing on behalf of the assessee and also the

contentions put forth by the Ld. CIT, DR, Smt E. Pavuna Sundari

appearing for the Revenue. We have also perused the materials placed on

record, including the impugned order(s) and their written submission(s).

Natham in the State of Tamil Nadu, and he was inter-alia, the Minister of

Electricity during the period 2011 to 2016. During the State elections, a

search was conducted by flying squad of Election Commission of India

upon Shri CPA in the course of which, cash of Rs.10.33 lacs was found

and seized. Thereafter, search was conducted at various premises of Shri

CPA on 22.04.2016 in which, cash of Rs.4.77 crores was found. Also, in

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 5 ::

the course of search, six (6) account book(s) were found and seized vide

ANN/FAY/CPA/B&D/S-1. When enquired regarding the contents of the

same, it is noted that, Shri CPA, in his statement u/s 132(4) of the Act

had admitted that, these account books related to his real estate and

finance commission business and that the cash found was also generated

in his own business. It is observed that, a specific question was put to

him by the Investigating Officer as to whether certain notings made by

way of ‘RV I’ and ‘RV II’ meant the assessee, which he is found to have

specifically denied. In his subsequent statement dated 02.07.2016, Shri

CPA was enquired about the monies received by his several finance firms,

to which, he inter alia stated that these were business loans taken by him

from the entities of Shri PLA against his personal guarantee. In the

several statements recorded in the course of search and the post-search

enquiries, it is observed that, Shri CPA had, at all times, maintained that,

he was engaged in real estate & finance business and that, the account

book(s) ID marked ANN/FAY/CPA/B&D/S-1 seized from his premises

contained entries of his business activities. However, much later (after a

gap of one year) on 03.04.2017, Shri CPA is noted to have again been

summoned u/s 131 of the Act and for the first time he stated that, the

account book(s) and the amounts received by his several finance firms

pertains to coal commission received by him on behalf of the assessee,

which was withdrawn in cash, and paid directly at assessee’s residence. It

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 6 ::

is seen that, another statement was also recorded on 10.04.2017.

However, on 09.05.2017, Shri CPA is found to have retracted his

statements dated 03.04.2017 & 10.04.2017 and filed a duly sworn

affidavit reiterating his original statement and admitted that, the monies

were received by the finance firms in their own proprietary capacity and

that these firms will pay appropriate taxes thereon. Shri CPA is also noted

to have filed affidavits from the partners of these finance firms and a

separate letter explaining the manner of disclosure of additional income of

Rs.205 crores. It is seen that, upon retraction, Shri CPA was again

summoned by the Revenue u/s 131 of the Act and in his cross-

examination recorded on 06.06.2017, he is found to have confirmed his

original statement recorded u/s 132(4) of the Act and also categorically

affirmed that, the account book(s) and the loans received by his finance

firms belonged to him and that he had voluntary disclosed income of

Rs.205 crores to tax. In spite of the foregoing admission of Shri CPA, the

AO of Shri CPA on 03.12.2018 recorded his satisfaction that, the seized

account books ANN/FAY/CPA/B&D/S-1 and the contents therein,

‘belonged’ to the assessee and therefore this seized material had a

bearing on the total income of the assessee. According to the AO of the

searched person [Shri CPA, in this case], the account book(s) were

maintained by Shri CPA for and on behalf of the assessee, which

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 7 ::

contained information regarding the coal commission earned by the

assessee across AYs 2014-15 to 2017-18.

CPA, the AO of the assessee is found to have recorded similar satisfaction

that the contents of the account book(s) seized from the premises of Shri

CPA related to the assessee. The AO was of the opinion that the

amount(s) featuring against several acronyms in the notebooks

represented the notings of coal commission derived by the assessee,

which was being received by the finance firms of Shri CPA, withdrawn in

cash and then handed over to the assessee. It is seen that, the AO of the

assessee has sought to corroborate his satisfaction that the account

book(s) of Shri CPA related to the assessee and had a bearing on his total

income, by referring to sworn statement(s) of several persons viz., Shri

Giri & Shri PLA, recorded in their respective search actions u/s 132 of the

Act, and also the material which was unearthed from the electronic

devices seized in the course of search upon Shri Giri. Thereafter, a search

was also conducted upon the assessee on 12.09.2016 and he was

confronted with these seized material and statement(s) and he is found to

have denied the same. As already noted above, neither any incriminating

material was found from the assessee’s premises nor did the assessee

incriminate himself or admit to earning any commission income in the

statement recorded u/s 132(4) of the Act. However, according to the AOs

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 8 ::

of the aforesaid respective searched third parties [Shri CPA, Shri Giri] the

material inter alia seized from their premises belonged/related to the

assessee, as they corroborated the explanation given by Shri CPA in his

statement(s) dated 03.04.2017 & 10.04.2017. Accordingly, the AO is

found to have recorded his satisfaction that the account book(s) found

from the premises of Shri CPA and the sworn statements of the aforesaid

persons suggested that the assessee had received unaccounted

commission of Rs.205,10,46,028/- across AYs 2014-15 to 2017-18.

also conducted on 04.01.2017 upon one M/s CEG Group, in the course of

which, two pages viz. ANN/SAA/KSI/LS/S-1, Page No.48 & 49, were found

which inter alia contained entries titled ‘Power M’ and based on the

statement given by one Shri SSU, General Manager, Accounts of CEG

Group, these entries were held to be relating to the assessee.

Accordingly, on the basis of this seized material, the AO arrived at a

separate satisfaction in the same satisfaction note recorded u/s 153C of

the Act that, the assessee had also derived unaccounted commission of

Rs.41,55,00,000/- across AYs 2014-15 to 2017-18.

The Ld. AR further pointed out that, there was another search 9.

conducted upon Shri PJR on 10.05.2016. He showed us that, the AO of

Shri PJR was of the view that, the loose sheets ID marked Annexure

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 9 ::

ANN/RB/PJ/LS/S found in the course of his search contained several

jottings and calculations and that in his view, these notings related to the

unaccounted monies amounting to Rs.28,55,86,500/- spent by him for

and on behalf of the assessee in AY 2017-18. Consequently, the AO of the

assessee incorporated reference to these seized material and sworn

statement of Shri PJR in the satisfaction note drawn u/s 153C of the Act

for AY 2017-18.

premises of these three parties, from third party searches, and the

statement(s) given by various persons, the AO had formed his satisfaction

that, the assessee was in receipt of commission in relation to the coal

supplied by M/s Adani Global Pte Ltd [in short ‘A Co’], M/s Knowledge

Infrastructure Strategy Systems Pte Ltd [in short ‘K Co’] and M/s CEG

Group to Tamil Nadu Electricity Board [in short ‘TNEB’]. It was the AO’s

case that, this commission was being received by the assessee through

the aid and assistance of Shri CPA, Shri Gobinath (in short Gobi), Shri Giri

and Shri PLA, whose notings was found in the account book(s) seized

from the premises of Shri CPA and that the same had not been offered to

tax by the assessee in his returns of income for AYs 2014-15 & 2017-18.

In so far as AY 2017-18 is concerned, the AO additionally observed that,

the material found from the premises of Shri PJR revealed unaccounted

cash expenses incurred by the assessee during that year election. With

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 10 ::

these observations, the AO usurped jurisdiction u/s 153C of the Act and

issued notice(s) dated 03.12.2018. The AO in the impugned assessment

order(s) is noted to have aggregated all the notings found in the account

book(s) seized from the premises of CPA having different acronyms,

names and abbreviations and held that, the aggregate amount(s)

represented coal commission earned by the assessee and added

aggregate sum of Rs.550.40 crores in the hands of the assessee by way

of ‘Income from Other Sources’ in AYs 2014-15 to 2017-18. Also, the

entries titled ‘Power M’ found in the ledger seized from the premises of

M/s CEG amounting to Rs.41.55 crores, was separately added in the

hands of the assessee in the respective years. Further, the alleged

unaccounted cash expenses found noted in the loose sheets seized from

the possession of Shri PJR was quantified at Rs.6.56 crores and added in

the hands of the assessee in AY 2017-18.

assailed the action of the lower authorities on several fronts. Having

regard to the arguments made before us, we find that, amongst the

several legal challenge(s) and objection(s) to the merits of the

addition(s), the first legal challenge of the assessee in all the AYs is inter-

alia to the validity of usurpation of jurisdiction u/s. 153C of the Act,

without satisfying the mandatory condition precedent prescribed by

Section 153C of the Act i.e. the AO has not recorded a valid satisfaction-

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 11 ::

note before assumption of jurisdiction u/s 153C of the Act. In other

words, the AO has issued notice u/s. 153C of the Act against the

assessee, by invoking special provision of assessment u/s. 153C of the

Act without satisfying the requirement of law as stipulated u/s. 153C of

the Act, and therefore the action of AO was claimed by the Ld. AR to be

ab-initio void. We are therefore inclined to first adjudicate this legal issue

raised by the assessee, which if found valid, goes to the root of the

matter [since it challenges the jurisdiction exercised by the AO u/s 153C

of the Act qua assessee, who is the ‘other-person’ as envisaged u/s

153C].

for the assessee, submitted that, the AO without satisfying the essential

condition-precedents had erroneously usurped the jurisdiction u/s 153C

against the assessee, based on searches conducted on third party

premises are bad in law and hence the assumption of jurisdiction u/s

153C is ab-initio void. According to Ld AR, in order to validly usurp

jurisdiction u/s 153C of the Act, it was incumbent upon the AO to first

identify the relevant material, that was found and seized from the

premises of the searched person(s), which in his view, ‘belonged to’ or

‘related to’ or ‘pertained to’ the assessee and had a bearing on the

determination of his total income, (which is the jurisdictional-fact). The

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 12 ::

Ld. AR placed before us the summary details of the seized material

referred to by the AO in his satisfaction note, which is as under:-

Document Description of seized Nature of contents Identification Mark material [As per AO]

ANN/FAY/CPA/B&D/S- Six account book(s) seized Daily notings of receipts and 1 from the premises of Shri CPA payments under several acronyms viz., R.V. I, R.V.(W), R.V. I (Per), R.V.II, Gobi R.V., Gobi (RV)I, Gobi. (RV)II, Gobi (Dubai), Lodha (HL), Thathu, Lodha, Lodha (Loan) HL, R.V.RL, Gobi HL(Dubai)

ANN/A/PA & Electronic devices seized from Phone Chats between Shri CPA- ANN/SM/Valuable/S Shri CPA & Shri Sudarshan Shri Sudarshan and Shri CPA- Shri Giri

ANN/A/GC, Electronic devices seized from Email correspondence, ANN/MKM/CG/ED/S Shri Giri agreements & invoices

ANN/SAA/KSI/LS/S-1 Loose sheets seized from the Loose notings of several (Page No.48 & 49) premises of M/s CEG amounts against nomenclature ‘Power M’

ANN/RB/PJ/LS/S Loose sheets seized from Shri Workings related to the total PJR number of voters in constituencies along with calculations and estimations

the AO of Shri CPA, and pointed out that, the AO was categorical in

observing that, the material seized from the premises of Shri CPA

‘belonged to’ the assessee. Narrating the legislative history of Section

153C and the amendment brought in by the Finance Act, 2015 with effect

from 01.06.2015, the Ld. AR submitted that the AO was conscious of the

judicial distinction between ‘belongs to’ and ‘relates to’ and that the scope

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 13 ::

of the former was much narrower. He then took us through the material

seized from the premises of Shri CPA and his statement(s) which has

been extensively relied upon in the satisfaction-note as well as the

assessment order(s). According to the Ld. AR, under no circumstance

could these account book(s) be said to be ‘belonging to’ the assessee and

he wondered as to how the AO was able to come to such a conclusion.

The Ld. AR argued that, Shri CPA had categorically averred in his

statement recorded u/s 132(4) as well his subsequent statements dated

17.06.2016 & 02.07.2016 that, these seized account books belonged to

him and that the entries therein also related to his proprietary business

activities. In fact, he showed us that, Shri CPA had later on also

quantified and admitted to unaccounted income on the basis of the

entries found in these account books. He also took us through the

contents of these account books and showed that there was nothing

contained therein which would even remotely suggest that they belonged

to the assessee or for that matter, related to the assessee. In light of the

foregoing, and the statutory presumption laid down in Section 132(4A)

and 292C of the Act, the Ld. AR contended that, the AO of Shri CPA, while

drawing his satisfaction note, had erroneously stated that these seized

material belonged to the assessee and thus in his view, the satisfaction-

note suffered from fundamental infirmity, which vitiates the finding of

jurisdictional-fact itself necessary for successful assumption of power u/s

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 14 ::

153C of the Act. The Ld. AR further argued that, even otherwise the

presumption u/s 132(4A) of the Act regarding the contents of seized

material is only against the searched person and not to any other third

party viz., the assessee and therefore when there was nothing contained

in the seized material relating to the assessee, the assumption of

jurisdiction u/s 153C of the Act by the AO was inherently flawed. The Ld.

AR also painstakingly took us through the several statement(s) given by

Shri CPA before the Investigating authorities and the inferences drawn by

the AO of the assessee therefrom in the satisfaction-note. The Ld. AR

claimed that the AO’s observation in the satisfaction-note dated

3.12.2018 that, Shri CPA had confirmed on oath that the notings in the

account books belonged/related to the assessee was factually perverse

and suffered from serious infirmities, when admittedly Shri CPA has

retracted the same and filed affidavit sworn before Notary Public

reiterating his statements/admission given earlier.

from the premises of Shri Giri, which again, as per the satisfaction-note

was stated to be ‘belonging to’ the assessee. He argued that, these email

communications, agreements and invoices belonged to different persons /

companies and clearly didn’t belong to the assessee. He further claimed

that, even the information contained in these communications didn’t

relate to the assessee in any manner. According to him therefore, the

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 15 ::

email correspondence found in devices ID marked ANN/A/GC &

ANN/MKM/CG/ED/S, as referred to in the satisfaction-note, didn’t have

any bearing on the total income of the assessee. Moreover, the

authenticity of the electronic information’s are suspect, and couldn’t be

relied without statutory-certification. The Ld. AR further assailed the

statement given by Shri Giri and showed that it suffered from serious

contradictions, and hit by hearsay and the AO erred in placing reliance on

it.

ANN/SAA/KSI/LS/S-1, Page No.48 & 49 seized from the premises of M/s

CEG Group and argued that the notings contained on these pages on

stand-alone basis cannot be said to relate to the assessee in any manner.

He pointed out that, the satisfaction of the AO hinged on the bald-

statement of one employee of M/s CEG Group, Shri SSU who had averred

that this was paid to one person presumably on behalf of the assessee.

According to Ld. AR, the AO could not have merely acted on such hear-

say statement while recording his satisfaction. The Ld. AR also pointed

out that Shri SSU had since retracted his statement and thereafter

confirmed his retraction in the course of cross-examination by the AO as

well. The Ld. AR thus claimed that, the AO was unjustified in holding

these seized material to relate to the assessee having bearing on his total

income.

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 16 ::

The Ld. AR thereafter took us through the rough notings, scribblings 16.

found in the loose sheets seized from the premises of Shri PJR and

submitted that not only were they dumb in nature but it could not be said

to relate to the assessee. He also took us through the statement of Shri

PJR and showed that, the searched person had at all times had

maintained that, these were rough notings and estimations and did not

reflect any actual transactions. The Ld. AR further submitted that, Shri

PJR at no time had implicated the assessee of any wrong-doing and

therefore the satisfaction-note drawn by the AO of the assessee was

unsustainable.

material were dumb documents from which, no prudent person properly

instructed in law could have inferred that they related or pertained to the

assessee, leave alone that it belonged to third party assessee. He also

pointed out several defects and fallacies in the notings, which, in his view,

showed that the said jottings didn’t relate to the assessee. He also took

us through the sworn statements of the several persons, which were

relied upon by the lower authorities and argued that, if one, closely

analyses the same, it would be discerned that these statements were per-

se hearsay, and either unreliable or misleading or suffered from

interestedness. The Ld. AR thus claimed that, when there were no seized

assets or books of accounts or documents found belonging or relating or

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 17 ::

pertaining to the assessee, which contained information having a bearing

on his total income, the jurisdiction assumed by the AO u/s 153C of the

Act was misconceived and invalid. According to him, in absence of

incriminating material against the ‘other person’ i.e., the assessee, found

in the course of search and there being nothing in the form of ‘valuable

asset’ (money, bullion, jewellery or other valuable article or thing seized),

or ‘books of account’ or ‘document’ seized or any information contained

therein which relates to the ‘other person’ [assessee], then the condition

laid down u/s. 153C(1) cannot be said to have been met, merely on the

basis of bald and self-serving statement(s) of some interested third

parties, and thus cannot justify initiation of proceedings u/s. 153C(1) of

the Act. According to him, even otherwise, such statements alone cannot

be the basis to justify initiation of proceedings u/s. 153C(1) of the Act. In

support, the Ld. AR relied on the following decisions of this Tribunal: • DCIT vs. VVD & Sons (P.) Ltd [2024] 158 taxmann.com 395 • Saveetha Institute of Medical & Technical Sciences vs. ACIT [2012] 25 taxmann.com 138 • ITO vs. Ramachandra Setty & Sons [2024] 163 taxmann.com 666. The Ld. AR also emphasized on the fact that, neither the 18.

Investigating Authorities nor the AOs of the searched persons nor the AO

of the assessee, had made any enquiries or investigation from A Co. or K

Co. who allegedly paid the impugned commission income to the assessee.

He claimed that, there was nothing brought on record to show that any of

these suppliers had ever admitted to have paid any commission to the

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 18 ::

assessee in lieu of the coal supplied by them to TNEB. According to him

therefore, when the purported source of payment viz., the suppliers, had

not been examined or investigated, and the origin of the so-called

commission payments had not been established, the entire case made out

by the Revenue in their satisfaction note as well as the impugned

assessment order(s) hinged solely on theoretical assumptions and

surmises.

satisfaction note, this Bench had inquired from the Ld. AR as to whether

at all, the assessee was having a say in the award of contract or he was

holding any position or post in TNEB [now ‘TANGEDCO’] and was he

involved in awarding contracts to the suppliers who had allegedly paid

commission to him. To this, the it was brought to our notice that, the

assessee neither held any post or position in TANGEDCO and he had

absolutely no role in the open tender process followed by TANGEDCO for

awarding coal contracts. The Ld AR in this regard also took us through the

reply furnished by TANGEDO to the enquiry made by the AO in the course

of assessment and showed that these contract(s) were awarded through

an open tender process, and the contemporaneous data showed that the

rates at which coal were supplied by A Co & K Co were commensurate or

lower to the rates at which other coal suppliers supplied coal to

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 19 ::

TANGEDCO during the same period. The Ld. AR thus submitted that, even

these contemporaneous facts negated the satisfaction drawn by the AO.

conducted upon the assessee and the post search enquiries didn’t result

in unearthing of any valuable asset, or any material or information which

would correlate with the allegation involving receipt of such huge

magnitudes of cash by the assessee in his personal capacity. According to

him therefore, the impugned satisfaction note was based purely on

hypothesis and it was not backed by any tangible asset or document or

books of accounts found in the course of search, which related to or

pertained to the assessee. The Ld. AR thus urged us to quash the

impugned order(s) passed u/s 153C/143(3) of the Act as the initiation of

proceedings u/s 153C of the Act itself stood vitiated in law. The Ld. AR

has furnished detailed written arguments in support of his contentions,

which, to avoid repetition, we shall be discussing in the ensuing

paragraphs.

Pavuna Sundari, supported the order of the AO. She contended that, the

AO had undertaken an extensive exercise while drawing up the

satisfaction note and conducted a detailed analysis of the seized material

and sworn statements for arriving at his conclusion that, the contents

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 20 ::

thereof related to the assessee having bearing on his total income. She

narrated the entire sequence of events from the first search which was

conducted on the premises of Shri CPA, and the subsequent searches on

Shri Giri, Shri PLA, Shri PJR. According to her, if the statements of all

these persons are read in conjunction, then one would be able to infer

that the account book(s) seized from the premises of the CPA contained

information which related to the assessee alone. She also took us through

the extensive findings recorded by the lower authorities while making the

addition(s) made on account of coal commission and argued that the

assessee has created an elaborate facade to derive the same with the

assistance of the aforementioned persons. The Ld. CIT, DR thus

submitted that, the AO had validly reopened the assessment u/s 153C of

the Act for AYs 2014-15 to 2017-18 and urged us to reject this legal

challenge raised by the assessee.

of the Act. Before we advert to the legal issue raised by the assessee, it

would first be necessary to take note of the legislation of Section 153C

itself. We note that Section 153A/153C of the Act was introduced by the

Finance Act, 2003 w.e.f. 01.06.2003. It replaced the provisions relating to

block assessment contained in Chapter XIV-B and introduced an

altogether new procedure for making assessment u/s. 153 of the Act. The

Scheme of assessment u/s 153A/153C is available to the department in

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 21 ::

addition to all other methods of assessments, revisions and

reassessments and each scheme has its distinct set of conditions and

stipulations that must be strictly adhered to. The sub-heading of Section

153A of the Act is "Assessment in case of Search or requisition" which is a

special provision for assessment in case of an assessee against whom

search u/s. 132 or requisition under section 132A of the Act is carried out

by the department. Section 153B of the Act prescribes the time limit for

completion of assessment u/s 153A and 153C of the Act. Section 153C of

the Act bears the heading "Assessment of income of any other person"

which is a special provision in respect of assessment of income of "any

other person" (third party) against whom no search u/s. 132 or

requisition u/s. 132A of the Act was carried out, provided certain safe-

guards, (conditions precedents) are satisfied as envisaged under Section

153C of the Act; and Section 153D of the Act is the provision regarding

approvals, for assessment in case of search or requisition as per

section153A and 153C of the Act.And as noted, section 153A of the Act is

a special provision for assessment of the ‘searched person’. From a

reading of Section 153A of the Act, it is noted that in case of ‘searched

person’, the AO is mandated to issue notice for six AYs preceding the year

of search in as much as once a person is searched, he is bound to call

upon such an assessee to furnish returns of income for the six preceding

AYs. However, where during the course of search u/s 132 of the Act, if it

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 22 ::

is found that any money, bullion, jewellery or other valuable articles or

things seized or requisitioned belongs to, or any books of account or

documents seized or requisitioned pertains to or any information

contained therein relates to "other than the person" searched u/s. 153A

of the Act [i.e. a third party, in this case the 'assessee'], then the AO of

the ‘searched person’ has to first record his satisfaction that the money,

bullion, jewellery or other valuable articles or things seized or

requisitioned belongs to the ‘other person’ or that any books of account or

documents seized or requisitioned or any information contained therein

relates to the ‘other person’, segregate the seized material of the ‘other

person’ from that of the ‘searched person’; and then, hand over the

relevant material which belongs/pertains/relates to the ‘other person’ to

the AO having jurisdiction over such ‘other person’ and thereafter, the AO

of the ‘other person’ shall record his satisfaction that, the relevant

incriminating material belongs/relates/pertains to the ‘other person’ which

has a bearing on the determination of the total income of such ‘other

person’. As Section 153C is a special provision against an assessee who

has not been searched by the department, the safeguards stipulated by

the statute contained in Section 153C has to be scrupulously followed.

AO, as to existence of jurisdictional fact as enumerated u/s 153C is

mandatory, in the absence of which, no notice u/s 153C of the Act can be

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 23 ::

validly issued. The rationale behind this exercise stipulated by the

Legislature is because; the special provision of Section 153A would

ordinarily be triggered only against the persons who are subjected to

search u/s. 132 of the Act. However, if any valuables/asset are found in

the searched premise, which belongs to a third party or books/documents

is found which pertain to/relate to a third party, then the third party

would be subjected to assessment/re-assessment as per Section 153C of

the Act. In order to do so, the safe guard/condition-precedent prescribed

in Section 153C of the Act by the statute has to be scrupulously

followed/complied. The satisfaction of Assessing Officer should be based

upon reliable/legal/cogent material, and such satisfaction is expected to

be that of a prudent/reasonable person. The reason for it, is that, Section

132(4A)(i) of the Act clearly stipulates that when inter alia any ‘asset’ or

‘books of accounts’ or ‘document’ is found in the possession or control of

any person in the course of a search, it may be presumed that such asset

/ material belongs to such person (the ‘searched person’). The

presumption as to the asset, books of accounts, etc. found during the

course of search u/s. 132 or survey u/s. 133A of the Act is also

recognized by Section 292C(1)(i) of the Act which provides that it belongs

to the person from whom the said assets/documents was found. In other

words, whenever an asset/document is found from a person who is being

searched, the presumption of fact is that the said asset/document belongs

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 24 ::

to that person, and the contents of it are true. It is for the Assessing

Officer to rebut that presumption and come to a conclusion or

'satisfaction' that the asset/document in fact belongs/pertains/relates to

somebody else viz., ‘other person’. Existence of cogent and demonstrative

material is germane to Assessing Officer’s satisfaction in concluding that

material belongs/pertains/relates to ‘other person for initiating action u/s

153C of the Act. Surmise and conjecture cannot take the place of

'satisfaction' and the same interpretation has been given by various

Courts.

made by the Hon’ble jurisdictional Madras High Court in the case of Agni

Vishnu Ventures Pvt. Ltd. vs DCIT (460 ITR 438) which are as

follows:

“77. The ingredients of Section 153C are:

(i) Satisfaction of the Assessing Officer who is Assessing Officer of the section 153A notice that money/bullion/jewellery/other valuable article or thing/books of account or documents (incriminating materials) seized/requisitioned belongs to/pertain to or any information contained, relates to, a third party.

(ii) Recording of satisfaction as above.

(iii) Handing over of the incriminating material to the Assessing Officer having jurisdiction over the third party.

(iv) Recording of satisfaction by the Assessing Officer of the third party that the incriminating material has a bearing on the determination of total income of the third party.

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 25 ::

(v) Upon condition of recording of the satisfaction of both officers as above, notices be issued to assess/reassess the income of the third party in accordance with the procedure stipulated under Section 153A.

(i) Recording of satisfaction by the Assessing Officer of the searched entities that some of the incriminating materials relate to a third party. (ii) Recording of satisfaction by the Assessing Officer of the third party that the incriminating materials have a bearing on the determination of the total income of that third party.

The contention of the revenue that a mandate is cast upon the Assessing Officer of the third party to issue notice under Section 153C for all the years comprising the block, mechanically and automatically, is thus rejected.

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 26 ::

of a notice cannot be an automated function unconnected to this exercise of analysis and ascertainment by an assessing officer.

applies, first the AO of the searched person has to satisfy himself that the

material in his possession ( of the searched person) is likely to implicate

the third party, since the money/bullion/jewellery/other valuable article or

thing/books of account or documents (incriminating materials) seized

belongs to/pertain to or any information contained, relates to, a third

party; and then record his satisfaction that the material seized from the

searched person belongs/pertain/relate to third person/other-person, then

hand over the satisfaction-note along with such materials to the third

party’s AO. [Existence of jurisdictional fact qua third-party is the

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 27 ::

foundation which should be discernable from the first satisfaction-note of

AO of the searched person.] Then the AO of the third party should record

satisfaction that the materials he received from the AO of the searched-

party "have a bearing on the determination of the total income" of the

‘third-party/other-person’, i.e. the second satisfaction-note should reveal

how such material have a bearing on the determination of the total

income of the third party. [if there is a legal challenge regarding the

validity of the second satisfaction-note, it would essentially be a mixed

question of fact & law]. Existence of jurisdictional fact qua third-party is

the foundation which should be discernable from the first satisfaction-note

of AO of the third party, which requirement is sine qua non for valid

handing over of the material to the AO of the third party; and then the AO

of the third party has to apply his mind and come to independent

satisfaction that such materials (handed over to him by AO of the

searched party) have a bearing on the determination of the total income

of the third-party; and then only he can be said to have validly assumed

jurisdiction u/s 153C of the Act against the third party. In other words,

notice under Section 153C against third party can be issued only upon

satisfaction of both conditions as aforesaid. At this juncture, it is made

clear that if the AO of the searched party and the third-party is the same,

then satisfaction-note may be one, but contents of it should fulfill both

the condition-precedents/requirement of law. However, if the

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 28 ::

documents/material which are said to relate/pertain to the ‘other person’,

is found does not ‘belong / relate / pertain to’ the other-person/third-

party or does not have “bearing on the determination of the total income"

for any particular AY, the AO would stand deprived of the authority to

initiate action under Section 153C for that year. Hence, where there is

absence of material found from the premises of ‘searched person’ which is

"having a bearing on the determination of the total income", it would

constitute the non-fulfillment of jurisdictional fact/law, then the AO cannot

assume jurisdiction u/s 153C of the Act. This is a vital stipulation which is

to be met by the AO because if the same is ignored or is treated in a

casual or farcical manner, then it would result in assessments coming to

be reopened under Section 153C of the Act even though there is no

material which relates to/pertains to the ‘other person’ or is not having

‘any bearing on his total income’ for the impugned AYs. In case if the AO

erroneously assumes existence of such jurisdictional fact, and confer upon

himself jurisdiction to assess third-party u/s 153C which it otherwise does

not possess, would vitiate the entire proceedings and notice issued u/s

153C, would be held to be wholly without jurisdiction. In this regard, we

gainfully refer to the following excerpts of the decision of the Hon'ble

Supreme court in Sinhgad Technical Education Society's case (397

ITR 344), wherein their Lordship took note of the Hon'ble High Court's

findings while confirming Tribunals view which is as under:—

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 29 ::

"6. The tribunal has found that incriminating material seized and stated to be pertaining to all six assessment years did not establish any correlation document-wise with the assessment year in question. In other words, the tribunal concluded that the present matter indicates that the issue of notice could be on the basis that there is specific incriminating information in possession of the Assessing Officer. It is in these circumstances that the tribunal found and as indicated in paragraph 8 of the impugned order that the revenue's assertion that the Assessing Officer is empowered under the statute to assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted and therefore the satisfaction which is recorded in the satisfaction note is enough, is erroneous. Therefore, the notice cannot be upheld and such stand of the revenue cannot be accepted. The reasons therefor are to be found in paragraph 9 and 10 of the impugned order. If certain items pertain to assessment year 2004-05 or thereafter then it cannot be assumed, that the documents seized or incriminating material giving information are specific and to all assessment years. The tribunal found that they were concluded assessments. They could not have been disturbed. The documents in question are neither incriminating ones nor unaccounted transactions of the assessee. They also did not relate to the four assessment years. It is in these circumstances that the tribunal found that it will not be possible to uphold the stand of the revenue that overall approach in matters of concealment by the group assessee and all the discoveries of the search on Shri Navale and it concerns, will have to be taken into account while forming the satisfaction. The satisfaction note was very closely examined and the reasons assigned by the Assessing Officer were found to be silent about the assessment year in which specific incriminating information or unaccounted or undisclosed hidden information was discovered or seized by the revenue from the assessee. In the circumstances, the general satisfaction and as recorded in the note is not enough. The tribunal has found that with regard to cash and jewellery, the explanation of the assessee was that he had agricultural properties and derived agricultural income. That income was utilised to acquire jewellery that was belonging to him and his family. With regard to cash stated to be recovered from the students for granting admissions, we do not find that any inquiries were made. There is absolutely nothing to indicate as to in which educational courses, the education is imparted and institution-wise. Whether the admissions are granted to the technical courses merit-wise or on the basis of marks obtained in XIIth standard HSC exam. If any fee structure is approved and cash component is therefore collected over and above the sanctioned fees are matters which ought to have been gone into and there cannot be a general or vague satisfaction as is relied upon.

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 30 ::

by the Hon'ble Supreme Court as under:-

"18. The ITAT permitted this additional ground by giving a reason that it was a jurisdictional issue taken up on the basis of facts already on the record and, therefore, could be raised. In this behalf, it was noted by the ITAT that as per the provisions of section 153C of the Act, incriminating material which was seized had to pertain to the Assessment Years in question and it is an undisputed fact that the documents which were seized did not establish any co-relation, document-wise, with these four Assessment Years. Since this requirement under section 153C of the Act is essential for assessment under that provision, it becomes a jurisdictional fact. We find this reasoning to be logical and valid, having regard to the provisions of section 153C of the Act. Para 9 of the order of the ITAT reveals that the ITAT had scanned through the Satisfaction Note and the material which was disclosed therein was culled out and it showed that the same belongs to Assessment Year 2004-05 or thereafter. After taking note of the material in para 9 of the order, the position that emerges therefrom is discussed in para 10. It was specifically recorded that the counsel for the Department could not point out to the contrary. It is for this reason the High Court has also given its imprimatur to the aforesaid approach of the Tribunal. That apart, learned senior counsel appearing for the respondent, argued that notice in respect of Assessment Years 2000-01 and 2001-02 was even time barred.

in the case of PCIT Vs Abhisar Buildwell (P) Ltd (454 ITR 212)

wherein it has been held in unequivocal terms that absent incriminating

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 31 ::

material, the AO would not be justified in seeking to assess or reassess

completed assessments. The same position would prevail in context of

Section 153C of the Act as well. Here too, the AO is mandated to firstly

identify the AYs' to which the material gathered in the course of the

search may relate to and consequently those assessments would face the

specter of Section 153C of the Act. The additions here too would have to

be based on material that may have been unearthed in the course of the

search or on the basis of material requisitioned. The statute thus creates

a persistent and enduring connect between the material discovered and

the assessment that may be ultimately made. All the above discussed

judgments thus reinforce the requirement of incriminating material having

an ineradicable link to the determination of income for a particular AY in

as much as it reinforces our view that notice u/s 153C can be validly

issued only when the AO records his objective satisfaction that he has

incriminating material belonging/pertaining to or relating to the ‘other

person’ for the relevant AYs and which may be concerned with their

disclosed and undisclosed income. Absent any material qua the ‘other

person’ that may either cast a doubt on the determination of total income

for a particular year or years, the AO would not be justified in invoking his

powers conferred by Section 153C of the Act. It would only be consequent

to such satisfaction being reached that a notice u/s 153C of the Act would

be liable to be issued.

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 32 ::

In this context, it has to be kept in mind that, when the challenge is 28.

to the validity of the satisfaction note basis which the AO has usurped

jurisdiction u/s 153C of the Act, we have to examine the satisfaction

recorded by the AO as it stands and no new words can be imported or

read into his ‘satisfaction note’ nor can the Revenue now supplement or

improve upon the satisfaction note. For this, we draw strength from the

jurisprudence available in the context of examination of the reasons

recorded/satisfaction drawn by the AO for re-opening the assessment u/s.

147 of the Act. It is settled law that reasons as recorded for reopening the

reassessment are to be examined on a 'stand-alone' basis. Neither

anything can be added to the reasons so recorded nor anything be

deleted from the reasons so recorded. The Hon'ble Bombay High Court in

the case of Hindustan Lever Ltd. v. R.B. Wadkar [2004] 137

Taxman 479/268 ITR 332 inter alia, held "it is needless to mention

that the reasons are required to be read as they were recorded by the

AO. No substitution or deletion is permissible. No addition can be made to

those reasons. No inference can be allowed to be drawn on the basis of

reasons not recorded by him. He has to speak through the reasons." Their

Lordships added that "the reason recorded should be self explanatory and

should not keep the assessee guessing for reasons. Reasons provided the

link between the conclusion and the evidence…..". It is a settled law that

the reasons recorded cannot evolve or be allowed to grow with age and

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 33 ::

ingenuity. The reasons which are recorded cannot be supplemented by

affidavits. If the reasons are allowed to be added, subtracted or deleted,

then by the time the matter reaches the Court/Tribunal, the Assessing

Officer would be allowed to change his reasons to believe escapement of

income. The Hon'ble Supreme Court in New Delhi Television Ltd.

(NDTV), v. DCIT [2020] 116 taxmann.com 151(SC) has held that

the Assessing Officer is not allowed to alter his reasons, which must be

considered only based on their recordings. In our considered view, this

ratio decidendi of the Hon'ble Supreme Court is applicable with equal

force to the satisfaction note prepared by the AO for assuming jurisdiction

to issue notice under section 153C of the Act.

we now revert back to the facts involved in the case before us. It is noted

that, the issuance of the notice(s) u/s 153C of the Act was preceded by

satisfaction note(s) drawn up by the AO for AYs 2014-15 to 2017-18 all

dated 03.12.2018. Since the satisfaction-notes would have a material

bearing on the legal challenge raised before us, it is relevant to first take

cognizance of the same. We observe that, the contents of satisfaction

note(s) for AYs 2014-15 to 2016-17 were identical. In so far as AY 2017-

18 is concerned, it is seen that, the first seven (7) paragraphs is identical

to earlier years and that the only additional satisfaction recorded in Paras

8 to 11 concerns the material seized from the premises of Shri PJR, which

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 34 ::

according to AO, had bearing on the total income for AY 2017-18 only.

With the consent of both parties, and to avoid repetition, we thus proceed

to examine the satisfaction note for AY 2017-18, and our findings

rendered in relation thereto shall mutuatis mutandis apply to all other AYs

2014-15 to 2016-17.

“2. During the course of search conducted in the case of Shri. C. P. Anbunathan, Karur, six account books found were seized vide ANN/FAY/CPA/B&D/S-1 dated 23.04.2016. On examination of the seized material i.e. ANN/FAY/CPA/B&D/S-1 dated 23.04.2016, it is seen that the cash accounts were meticulously maintained with ledger folio number containing minute details including petty expenses and entries were made in code words viz. R.V. I, R.V.(W), R.V. I (Per), R.V.II, Gobi R.V., Gobi (RV)I, Gobi. (RV)II, Gobi (Dubai), Lodha (HL), Thathu, Lodha, Lodha (Loan) HL, R.V.RL, Gobi HL(Dubai) etc. in the seized books found. When Shri. C.P. Anbunathan was asked about these entries, he confessed that the code words, R.V. I, R.V.(W), R.V. I (Per), R.V.II, Gobi R.V., Gobi (RV)I, Gobi. (RV)II, Gobi (Dubai), Lodha (HL), Thathu, Lodha, Lodha (Loan) HL, R.V.RL, Gobi HL(Dubai) etc. indicated 'Natham R Viswanathan' and that he had received the cash amounts including other commission income on your behalf. Shri. C.P. Anbunathan has already confessed vide sworn statement recorded from him that, he maintained and delivered to you, your coal commission income viz., for supply of coal to TNEB, for projects' approval and commission for windmills and solar power establishments. Hence, it is clear that the cash amounts handled and delivered by Shri. C.P. Anbunathan to you is mentioned in code words R.V. I, R.V.(W), R.V. I (Per), R.V.II, Gobi R.V., Gobi (RV)I, Gobi. (RV)II, Gobi (Dubai), Lodha (HL), Thathu, Lodha, Lodha (Loan) HL, R.V.RL. Gobi HL(Dubai) ect.,. It is pertinent to note that such amounts received through banking channel of Rs. 205,10,46,028/- has already been admitted by Shri. C.P. Anbunathan in his sworn statement, as received on your behalf and handed over to you. The seized books of accounts also contain entries pertaining to Interest received by you.

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 35 ::

delivered the same to you/through Shri. Gobi (Gobinath, your nephew and PA) to you.

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 36 ::

voters of Athoor constituency in which you contested during the Tamilnadu Assembly election in May 2016, amounting to Rs.28,55,86,500/-Among the loose sheets found are papers pertaining to the affidavit to be furnished before the Returning Officer for election to Tamilnadu Legislative Assembly, bearing your name. Shri. P. Janakar has stated vide sworn statement recorded from him that the expenditure reflected in the loose sheets pertains to workings related to the total number of voters in each booth in Athoor constituency and estimation of payments to voters.

sub-divided into three categories viz., (a) satisfaction drawn regarding

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 37 ::

receipt of coal commission on the basis of the material seized from the

premises of Shri CPA in light of sworn statements of Shri CPA, Shri Giri,

Shri PLA etc., (b) satisfaction drawn regarding earning of commission

from CEG Group on the basis of loose sheets seized from their premises

and (c) satisfaction drawn regarding incurrence of unaccounted expenses

on the basis of the loose sheets seized from the premises of Shri PJR.

We first take up the first satisfaction (a) recorded by the AO, which 31.

is set out in Paras 2 to 4 of his satisfaction note. Reading of Para 2 of the

satisfaction note reveals that, according to AO, the account book(s) ID

marked ANN/FAY/CPA/B&D/S-1, which was seized from the premises of

third party [‘Shri CPA’], contained notings titled - R.V. I, R.V.(W), R.V. I

(Per), R.V.II, Gobi R.V., Gobi (RV)I, Gobi. (RV)II, Gobi (Dubai), Lodha

(HL), Thathu, Lodha, Lodha (Loan) HL, R.V.RL, Gobi HL(Dubai). The AO

has observed that, when enquired about these notings, Shri CPA in his

sworn statement had indicated that, all these entries related to the

assessee and that these entries denoted the coal commission received by

Shri CPA on behalf of the assessee. The AO therefore arrived at his

satisfaction that, the cash amount(s) found noted in these account books

were handled and delivered by Shri CPA to the assessee, who was

mentioned by way of the several acronyms, as noted in the foregoing.

The AO thereafter has sought to corroborate his satisfaction drawn in Para

2, by relying upon the sworn statement(s) of Shri Giri & Shri PLA, in Para

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 38 ::

3 of his satisfaction note. In Para 4, the AO has referred to the electronic

data which was seized during the searches conducted at the premises of

Shri CPA & Shri Giri from 10.05.2016 to 12.05.2016, which in his view,

contained evidences which corroborated the payment of coal commission

by Shri CPA to the assessee and that the notings found in the account

book(s) seized from the premises of Shri CPA related to the assessee. The

AO accordingly quantified that, Shri CPA had received aggregate amount

to the tune of Rs.205 crores through banking channels in his finance

firms, for and on behalf of the assessee. The AO was of the view that,

these monies were withdrawn from the bank account(s) by Shri CPA and

delivered in cash to the assessee through Shri Gobi.

drawn by the AO against the third-party assessee was the account books

ID marked ANN/FAY/CPA/B&D/S-1 which was seized from the premises of

searched-party [‘Shri CPA’] in the course of search conducted upon him

on 22.04.2016. The AO has sought to unravel the coded notings found in

the account book(s) of Shri CPA, which otherwise is ex-facie

indecipherable, by relying upon the statement(s) given by Shri CPA, Shri

Giri & Shri PLA. Hence, it is imperative for us to examine the material

seized from the premises of Shri CPA in light of their sworn statement(s).

For doing that let us look at the satisfaction drawn by the AO. In this

context it is noted that though the AO has recorded two satisfaction-

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 39 ::

notes, the AO is same for both searched-person/Shri CPA as well as the

assessee (other-person/third party). A look at the satisfaction drawn by

the AO [in his capacity as assessing officer of Shri CPA] for coming to the

conclusion that, the aforesaid seized material belonged/pertained to third-

party (assessee in this case) which information (found from books)

relates to him/assessee, basis which it was necessary to procced/record

further second satisfaction-note (as the AO of the assessee) to issue

notice u/s 153C against third-party assessee. So, when we evaluate the

satisfaction-note recorded by the AO in her capacity as AO of Shri CPA,

who was searched, she was of the view that, these account books ID

marked ANN/FAY/CPA/B&D/S-1 ‘belonged to’ to the assessee and not

Shri CPA and therefore the contents therein were to be inferred in the

hands of the assessee. The relevant satisfaction note recorded by the AO

of Shri CPA is being reproduced below:

Satisfaction Note recorded in the matters of CPA u/s 153C

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 40 ::

Details of transactions related to (b) Description of seized material TNEB coal commission & other commission received through various entities including offshore bank accounts and maintained by Shri. C.P. Anbunathan on behalf of Shri. Natham R. Viswanathan and transaction pertaining to Interest payments made to Shri. Natham R. Viswanathan.

(c) Address of premise/place from where ANN/FAY/CPA/B&D/S-1 dated such material was seized. 23.04.2016 from No. 104, Orathai Road, Byepass/ Ayyampalayam, Thottkuriuchi Post, Karur in the case of Shri. C. P. Anbunathan.

ANN/A/PA dated 10.05.2016 from Room No. 2321, ITC Windsor Hotel, No. 25, Windsor Square, Golf Course Road, Bangalore -52.

ANN/SM/Valueable/S dated 23.04.2016 from No.10/97C, Ayyampalayam, Thottakurichi Post, Karur

ANN/PA/MK/S dated 23.04.2016 from No. 10/97C, Ayyampalayam Thottakurichi Post, Karur

ANN/ST/SS/ED/S-1 & dated 12.05.2016 at Income Tax Investigation Wing, No. 46, N.H. Road, Nungambakkam, Chennai 600 (d) Date of seizure of such material 034.

(e) particulars of relevant panchanama 23.04.2016, 10.05.2016, 12.05.2016

(f) Annexures/S.No./ Page number etc. Panchnama dated 23.014.2016, (particulars to be specified) 10.05.2016, 12.05.2016.

i) ANN/FAY/CPA/B&D/S-1 dated 23.04.016 ii)ANN/A/PA dated 10.05.2016 iii)ANN/SM/Valuable/S dated 23.04.2016 iv) ANN/PA/MK/S dated 23.04.2016 v)ANN/ST/SS/ED/S-1 &2 dated 12.05.2016 6. Relationship of the person referred in S. Shri . C. P. Anbunathan is a close No. 4 with the person referred to in S. No. aide of Shri. Natham R.

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 41 ::

2 Viswanathan and has received and maintained the Tamilnadu Electricity Board (TNEB) coal commission/ other Commission on behalf of Shri. Natham R. Viswanathan 7. Satisfaction of the assessing officer of the I am satisfied that the Books of person referred to in section 153A that the accounts/ documents/electronic seized material referred to in S. No. 5 devices seized as per annexures relates to the person referred to in S. No. above belong to Shri. Natham R. 4 Viswanathan and have a bearing on the determination of Total Income of Shri. Natham R. Viswanathan for the AY. 2017-18. 8. Assessment Years involved 2017-18

account books ID marked ANN/FAY/CPA/B&D/S-1 seized from Shri CPA,

‘belonged to’ the assessee. Having perused the contents of the seized

material which was placed in Paper-book Volume - IV, the Ld. AR has

rightly pointed out to us that, there was nothing contained in this seized

material, basis which any prudent person could deduce that, they

‘belonged to’ the assessee. We find that there is no such indication in the

seized material. The Ld. AR has rightly submitted that, there is also no

mention of name of the assessee, or his signature or acknowledgment

therein, which would suggest that it ‘related to’ him, let alone ‘belonged

to’ him. It is imperative to remind ourselves at this stage that,

presumption set out in Section 132(4A) of the Act is that, the documents

found in the course of search shall be presumed to belong to the searched

person [CPA, in this case]. Further, the presumption as to any asset,

books of accounts, etc. found during the course of search u/s. 132 of the

Act is also governed by section 292C(1)(i) of the Act, which presumes

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 42 ::

that, the same belong or belongs to the person from whom the said

assets/documents were found during the course of search. Therefore, in

our considered view, the statutory presumption of fact qua the account

books ID marked ANN/FAY/CPA/B&D/S-1 seized from the possession of

Shri CPA at the time search was that, they belonged to him and that, the

contents thereof were presumed to be true qua him. According to us

therefore, it was for the searched person [Shri CPA, in this case] or the

AO of the searched person to rebut this presumption and bring on record

some tangible corroborative evidence to show that, the seized material

did not ‘belong to’ or ‘relate to’ him i.e. the searched person [Shri CPA, in

this case], but that of assessee, which we find is absent in the present

case.

The Ld. AR reminded us that, prior to the amendment made by the 34.

Finance Act, 2015, in order to invoke Section 153C, the AO of the

‘searched person’ was required to demonstrate that the books of accounts

‘belongs or belonged to’ the ‘other person’. He recapitulated the litigation

which ensued on the interpretation of ‘belongs or belonged to’ used in

Section 153C of the Act and particularly pointed out the decision of the

Hon’ble Delhi High Court in the case of Pepsico India Holdings (P.)

Ltd. v. Asstt. CIT (370 ITR 295) wherein the High Court has observed

that the words "belongs or belong to" should not be confused with the

words 'relates to or refers to,' the former being much narrower than the

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 43 ::

latter. He explained to us that, in relation to searches which were

conducted on or before 01.06.2015, the provisions of Section 153C could

not have been invoked unless the documents/material 'belong to' the

third party (other than the searched person). Vide Finance Act, 2015,

w.e.f. 1-6-2015, section 153C was amended by way of substitution to

replace the words "belongs or belong to" with the words "pertains or

pertain to" insofar as books of account and documents are concerned.

Hence, the words "pertains or pertain to", is of much wider import than

"belongs or belong to" and therefore post 01.06.2015, if incriminating

documents/materials ‘pertaining to’ a third party are found, the Revenue

can proceed against such third party u/s 153C of the Act.

assessing officer of Shri CPA] was fully aware of the legislative

amendment that broadened the scope of Section 153C to material even if

it did not ‘belonged to’ but ‘related to’ another person. However, the AO

of the Shri CPA ultimately recorded his satisfaction by applying the narrow

scope of ‘belonged to’ in relation to the account book(s) seized from the

premises of the searched person [Shri CPA]. This conscious use of the

terminology ‘belonged to’, in Ld. AR’s opinion, demonstrates a deliberate

analytical decision, whereby the AO of Shri CPA though being aware of

the expanded textual remit of the provision had concluded that the factual

matrix of the case at hand did not fall within the broadened scope of

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 44 ::

‘related to’ and held that, the seized material ‘belonged to’ to the

assessee. The Ld. AR has contended that, the rejection of the wider

amended scope of Section 153C [vide Finance Act, 2015] was not an

oversight by the AO of Shri CPA, but a considered judicial exercise. Upon

taking judicial note of the foregoing, we are of the opinion that, the

satisfaction drawn by the AO of Shri CPA is required to be read and

examined as it stands to which no new words or meaning can be imported

therein. Accordingly, there is merit in the Ld. AR’s contention that, this

satisfaction recorded by the AO [in her capacity as assessing officer of

Shri CPA] supra observing that the impugned seized material viz.,

ANN/FAY/CPA/B&D/S-1 ‘belonged to’ the assessee was factually

perverse, on the given facts before us and therefore all consequent

actions including the impugned satisfaction drawn by the AO of the

assessee stands rendered bad in law.

the AO in her capacity as Assessing Officer of Shri CPA may have used the

terms ‘belonged to’ but in the capacity as the AO of the assessee had

rightly drawn satisfaction that the impugned material ‘related to’ the

assessee and thus there was no infirmity in the satisfaction of the AO of

the assessee. For the sake of completeness, we consider it fit to also

examine as to whether the impugned seized material ‘related to’ the

assessee and therefore whether it had any bearing on his total income. In

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 45 ::

order to adjudicate the same, it is necessary to keep in mind the well-

settled position of law that, the presumption u/s 132(4A) of the Act

regarding the contents of seized material is only against the searched

person [Shri CPA, in this case] and not against any other third party

[assessee, in this case]. Reason being that, if any loose notings found in

the seized material at third party premises is assumed to pertain to third

party, at its face value, then any person for that matter can mention

anyone's name in any loose paper/diary at their sweet will and that can

be used to implicate such other person for no fault of the latter. Hence,

the well settled judicial principle is that, an entry made in a diary or

account book by a third person with scant details cannot be used to

fasten tax liability on the person whose name appears therein, unless

corroborative evidence is brought on record. This is a basic rule of

prudence. The evidentiary value of regular account book, the Hon’ble

Apex Court has held in V.C. Shukla, [1998] 3 SCC p.433, in para 37, by

approving the view of the Nagpur High Court in Beni v. Bisan Dayal [AIR

1925 Nagpur 445] wherein it was observed that entries in books of

accounts are not by themselves sufficient to charge any person with

liability, the reason being that a man cannot be allowed to make evidence

for himself by what he chooses to write in his own books behind the back

of the parties. There must be independent evidence of the transaction to

which the entries relate and in absence of such evidence no relief can be

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 46 ::

given to the party who relies upon such entries to support his claim

against another.

was there any explicit mention of name of the assessee, or that he was

specifically identifiable from the notings made in the account books ID

marked ANN/FAY/CPA/B&D/S-1. Only certain ‘letters’ in abbreviated form

written. It is seen that, the assessee had also not signed nor

acknowledged any of these pages. Hence, prima facie there was no

indication that, the entries in the account book(s) ‘related to’ the

assessee. Further, the presumption set out in Section 132(4A) and 292C

of the Act regarding the contents of the account books ID marked

ANN/FAY/CPA/B&D/S-1 is found to have been reinforced by the searched

person [Shri CPA, in this case] in his deposition recorded u/s 132(4) of

the Act dated 22.04.2016. We find that, when confronted with these

account books at the time of search, Shri CPA, is noted to have stated as

under:-

“Q.No.9. I am showing six account books related to your business. All these are seized from your office? Give details about it?

Ans: These six account books relate to my business. My staff, Sri. Mohan Raj had written and maintained it. Presently, in a road accident he is admitted in KMCH, Kovai and getting treatment.”

material viz., ANN/FAY/CPA/B&D/S-1 belonged to and related to him. He

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 47 ::

had also explained that the books were maintained and recorded by his

own staff, Shri Mohan Raj. Prima facie therefore, the satisfaction drawn

by the AO in the second paragraph of his satisfaction note dated

03.12.2018 is found to be factually wrong, as the original statement of

Shri CPA recorded u/s 132(4) of the Act does not show that, he had

indicated in any manner, that the entries in the account book(s) related to

the assessee.

Officer also did not dispute the above statement of Shri CPA, at the time

when Shri CPA was again examined u/s 132(4) of the Act in his second

search action conducted along with Shri Giri on 10.05.2016. The Ld. AR

showed us that, no question whatsoever was put to him on this aspect in

this statement dated 10.05.2016. It is observed that, two statement(s)

u/s 132(4) was recorded from Shri CPA and in none of them did he state

that the noting(s) in the account book(s) pertained to the assessee.

Rather, he is found to have owned up to these notings in his own

proprietary capacity. It is to be kept in mind that, the statement(s)

recorded u/s 132(4) carries evidentiary value and therefore stands on a

higher pedestal to statement(s) recorded u/s 131 of the Act.

131 of the Act dated 17.06.2016 & 02.07.2016, were also recorded in the

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 48 ::

post search enquiries by the Investigating Officer of Shri CPA. He showed

us that, specific & pointed question(s) were again posed to Shri CPA

enquiring about the nature of entries found in these account books, to

which Shri CPA in his several answers had explained that, these related to

his proprietary business transaction(s) conducted in the course of the real

estate & finance business. The relevant excerpts from his statement dated

02.07.2016, taken note of by us, is as below:-

“Q.6. I am showing Page No.206, Sl.No. Book 1, ANN/FAY/CPA/B&D/S- 1, dtd.23.04.20156-In this there is a mention about Giridharan, Chennai, Submit the details about him and the transactions carried out with him?

Ans: I have seen the page of the Document properly. Giridharan is a friend of mine. I know him for the past 5 years. He was introduced to me through one Sasikumar, Real Estate Agent. Myself and Giridharan have together, purchased land in Tambaram, Sriperumbudur, Neelankarai and other places and sold it. Money Transactions (Hand loan) were also there between myself and Giridharan. Apart from this, Giridharan used to collect and give, loan amounts due to me from my borrowers. From this income, I used to give commission to him. In the past 5 years, I have given an amount of about Rs.2 Crores, as commission to him.

Q.7. I am showing you Page no. 206 of Sl.No: Book -1, ANN/FAY/CPA/B&D/S-1, dtd.23.04.2016, wherein entry in the name of "Lodha" is found. Give your explanation.

Ans: Lodha is introduced to me by Giridharan. Joining with him I did real estate and finance business. Between ourselves, fund transfers in cash as well as by cheque have taken place. In total, about Rs.100 crores of transactions was done.

Q.8. Give Bank account details through which the above stated (i.e. about Rs.100 Crores) fund transfers had taken place.

Ans: The amount of about Rs.100 crores received by me from Lodha was in RTGS. At present, I do not remember the account numbers of said bank accounts. These accounts belong to many finance firms. I am

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 49 ::

the Financial Advisor of these firms. I do not remember the names of these firms immediately.

Q.9. I am showing you the statement recorded by S.Manikandan, IRS, 13.05.2016 from Sri.Giridharan and DDIT (Inv.)(I/C), Trichy, on Annexure - 5 to it. As per the said statement, Giridharan had stated that you have 30 accounts in Canara bank, Karur and Karur Vysya Bank, Karur West, LNS Branch. I am also showing the messages sent to you by Lodha through Email. Give the details for it.

Ans: The 30 bank accounts listed in Annexure - 5 belongs to the finance firms. I am the Financial Advisor of all this firms. But as stated by Giridharan, I have not received any coal commission. All the receipts are loans from Lodha.

…..

Q.11. Based on your personal guarantee, the above said firms have received loans of 100 crores from Lodha for their finance business. Why the monies are not received directly by you or by concerns directly related to you and used for your finance business?

Ans: I am already a partner in 38 Concerns. Hence, on my advice, the above said 30 finance firms, managed by my relatives, have received the monies as loans and doing business.”

entries found in the account book(s) related to his proprietary business

activities and he had also explained the business rationale for receiving

monies from Shri PLA in his finance firms. The important aspect to be

noted, according to us, is that, in none of his answers did he ever name

the assessee or suggest that he was involved in any business or

transactions with the assessee in any manner or that these account books

belonged to the assessee or that the entries therein pertained to the

assessee. Again, we find that there is no indication in these answers

which could be linked to the assessee.

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 50 ::

The Ld. AR next invited our attention to another statement of Shri 42.

CPA which was again recorded u/s 131 of the Act on 28.12.2016 wherein

when enquired about the details of income & expenditure noted in these

account books, Shri CPA had explained that, they related to his finance

business for the past three years and that he shall work out the income

from his business and pay taxes thereon. The relevant portion of this

statement, is also reproduced hereunder:-

“Q.4.In the book (ANN/FAY/CPA/B&D/S-1) seized during the search proceedings at your house on 22-04-2016, details of income and expenditures are written in S.No.1 to 6. Explain the details for it.

Ans: I am in finance business at Karur, for the past 10 years. The entries in the books seized relate to my finance business in the past 3 years. I have been doing finance business, as written in the book, seized from my office. I do not have copies of the book that has been seized. Hence, out of my remembrance, I shall arrive at the income from the finance business and pay the tax on that. I shall submit before you, my income tax accounts within a week's time. Further, if there is a difference between my submissions and the amount found in the book seized, I shall agree and pay the tax on such difference also. I have nothing more to say.”

132(4) of the Act dated 22.04.2016, which by itself is valuable piece of

testimony having evidentiary value and also his subsequent statement(s)

dated 10.05.2016, 17.06.2016 & 02.07.2016. We therefore find sufficient

force in the Ld. AR’s submissions that, at no point of time, during the

course of search or in post search enquiries had the searched person

[Shri CPA] ever averred that, the account books seized from his

possession belonged to another person [assessee, in this case] or that the

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 51 ::

entries of income & expenditure therein related to another person

[assessee, in this case]. Rather, the searched person [Shri CPA] had

categorically stated that, these account book(s) belonged to him and the

entries therein related to his real estate & finance business and had also

offered to work out his unaccounted income and pay taxes thereon.

assessee had never been named by Shri CPA in any of his answers, then

how did the assessee come to feature in this entire narrative. The Ld. AR

pointed out to us that, the name of the assessee first featured in a

leading question (Q no. 10) which was put forth by the Investigating

Officer to Shri CPA on the date of search itself i.e. 22.04.2016, in which

the Investigating Officer observed that, “…Does RV mean Natham R

Viswanathan. Is Gobi his brother-in-law?” In his answer, Shri CPA is

noted to have responded with a ‘No’ and stated that, they are not the

same persons. The relevant portion of the statement is noted as under:-

“Q.No.10. In page No.4,5 &7 of Book no.3, it is mentioned as RV I, II. Further, in RV I, there is an outstanding of 1 Crore, in RV II, outstanding of 14 crores is there. Further, in page no.77, 78, transactions of 60 crores have taken place. Does RV mean Natham R Viswanathan. Is Gobi his brother-in-law? Explain? Further in page no. 10 it is mentioned VL account. Is it vaidhiyalingam?

Ans: No, they are not the persons, named by you. I do not know.”

by the Investigating officer reeked of prejudiced mindset and pre-

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 52 ::

meditated notion against the assessee. The Ld. AR made us wonder as to

how this question and such pointed allegation against the assessee arose

in the mind of the Investigating Officer on the date of search, when

neither the seized material nor any answers of Shri CPA indicated or

incriminated the assessee in any manner. The Ld. AR took us through the

entire contents of the seized material and showed that the name of the

assessee nowhere featured in the account book(s) seized from the

premises of Shri CPA. He also explained that, the premises where the

alleged cash was found from the possession of Shri CPA was not located

within the constituency of the assessee and that, admittedly, there is no

allegation that the seized cash ‘belonged to’ the assessee. The Ld. AR also

took us through all other questions put to Shri CPA in his statement(s)

and the answers given at the time of search and showed us that, there

was no such answer given by Shri CPA to any of the questions put to him,

which would indicate that the entries titled ‘RV’ suggested the assessee.

given by Shri CPA in his statement dated 22.04.2016 [Q No.5],

10.04.2017 [Q No. 6] wherein Shri CPA had mentioned that, he was a

trustee in one ‘RVS Trust’ and even the Investigating Officer had found

large value deposits in the bank account of the said Trust and therefore

they had questioned him regarding the same. For ease and convenience,

the relevant excerpts from these statements are extracted herein-below:-

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 53 ::

“Statement dated 22.04.2016

Q.No.5 Apart from the businesses mentioned in your answer to question no.2, do you carry on any other business?

Ans: I was in RVS Trust. I am also a member of Brilliant Trust. I am also running Samyuktha trust.

Statement dated 10.04.2017

Q.No.6 You were the Managing Trustee of RVS Educational Trust in the year 2014. At that time, in RVS Bank A/c (No.4522101000317) in September 2014, through RTGS, lots of money was deposited. What is your explanation.

Ans. I was looking after the administration of RVS Educational Trust only. The Bank accounts were operated by Shri. Muthusamy Chettiyar. Only he should give the explanation for this. I do not have any connection with RVS Educational Trust, Trichy.”

could have initially suspected that the acronym ‘RV’ used in the account

books may suggest the ‘RVS Trust’ with whom the searched person [Shri

CPA] had an inextricable connection and was also a large educational

conglomerate. The Ld. AR pointed out that, the account book(s) inter alia

contained several notings of banking transactions with the ‘RVS Trust’,

which Shri CPA had admitted to and accepted as well. He also showed us

from the statement of Shri CPA recorded on 22/23.04.2016 that, Shri CPA

was the Managing Trustee of ‘RVS Trust’ for a year. And it is in public

domain that RVS Trust operated two (2) schools and two (2) colleges.

According to him therefore, the needle of suspicion as to the nature of

code wordings ‘RV’ ought to first have been towards ‘RVS Trust’ with

whom Shri CPA was admittedly related to and had regular business

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 54 ::

transactions as well (refer his statement dated 03.04.2017 and ledger

account of Giri). The Ld. AR submitted that, rather than conducting an

impartial and unbiased fact-based inquiry, the Investigating Officer posed

leading questions that appeared designed to elicit false response

implicating the assessee, despite the absence of any relevant material

against him. The Ld. AR thus claimed that, the aforesaid line of

questioning at the time of search to subjectively implicate the assessee

not only undermined the integrity of the investigation but also raised

serious concerns about the objectivity and fairness with which it was

conducted.

through the individual entries of income and expenditure recorded in the

account book(s) seized from the premises of Shri CPA. The Ld. AR placed

before us a summary of receipts found in these books, to show that the

entries therein cannot by any stretch of imagination be said to relate or

pertain to the assessee. The tabulated details of sample notings of

receipts are as under:-

S. Particulars Amount Remarks No (Rs. in crores) 1 Personal investment of Mr. 13.55 All sources for investment were out Anbunathan in his School in of receipts through bank accounts Coimbatore of finance firms 2 Payment to acquire 39.78 -Do- property belonging to HMCL through share purchase

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 55 ::

3 Payment to A Co 37.00 Sources for payments were out of 20.07.2015 – Rs. 35 cr receipt through bank accounts of 13.02.2016 – Rs. 2cr finance firms 07.09.2015 – Rs. 25 Cr Out of Rs. 62 cr, payment of Rs. 25 cr made to ‘A’ on 7.9.15 is considered in payments to Thakur Cash receipt 15.70 in S. No. 4 below

4 Loan given to Thakur 45.00 Sources for payments were out of receipts through bank accounts of finance firms

Payments received from 5.50 Repayments received through bank Thakur as per his account accounts of finance firms in seized book

5 Payments from A to HD 12.00 No possible connection to the (HD) Highways dept. assessee 6 Payments to ‘G’ (Dubai) 20.00 It was the repayment of HL from Lodha (page 16/PB 4)

Sources for payments were out of receipts through bank accounts of finance firms. Hence, Considered only once. 7 Receipt from Gobi 41.48 Running account was maintained in the name of Gobi containing receipts as well as payments 8 Receipts from: Vaibhav Jyoti, Hyd 8.54 Sources for payments were out of Hind Bharath 2.00 receipts through bank accounts of Shakti Sugars 5.00 finance firms

The money was returned/repaid to the concerned on 20.07.2015, 05.01.2016 & 20.07.2015. 9 Payments to BGL 7.00 Sources for payments are out of receipts through bank accounts of finance firms. 10 Meenakshi Mission, Madurai 5.65 Facilitated encashment of DDs of MMM for a commission.

Sources for payments are out of receipts through bank accounts of finance firms.

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 56 ::

Total 267.78

personal investments made by Shri CPA in school(s). As noted earlier,

Shri CPA was actively involved in RVS group which was an educational

conglomerate and also other educational institutions (Brilliant Educational

Trust) and therefore these notings appears to suggest that, it related to

Shri CPA’s own proprietary business activities. Likewise, there is indication

of several receipts from Meenakshi Mission. It is observed from the sworn

statement(s) of Shri CPA and Shri Giri that, it was related to personal

business transactions of Shri CPA and not the assessee. Overall, the Ld.

AR has attempted to identify receipts to the tune of 267 crores [88% of

the notings] which prima facie appeared to relate to Shri CPA rather than

any third person. Therefore in our considered view, the Ld. AR has rightly

contended that the contents of these account book(s) cannot be said to

relate to any third person [assessee, in this case], but contained

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 57 ::

information pertaining to Shri CPA alone and denoted record of his own

business transactions.

seized material was found from the possession of Shri CPA and the same

was maintained by his own staff, Shri Mohan Raj. It is seen that, Shri CPA

in his statement u/s 132(4) of the Act had categorically admitted that, the

account books and entries therein related to his business and had also

explained its contents and offered to pay taxes thereon. Also, the nature

of entries, as observed by us above, denotes that it was a record of Shri

CPA’s own business transactions. In light of the foregoing, the answer

which eludes us is how did then the AO of the assessee infer in his

satisfaction note that, these account book(s) were being maintained by

Shri CPA for and on behalf of the assessee. To this, it was pointed out by

the Ld. CIT, DR that, Shri CPA subsequently had given statements dated

03.04.2017 & 10.04.2017 [after almost a year from the date of search]

wherein he completely changed his original narrative and stated that, all

these entries made in the account book(s) and the monies received by his

finance firms were not for himself but, for and on behalf of the assessee.

The copy of these statements is found placed at Pages 52 to 85 of

Paper Book, Vol II. According to the Ld. CIT, DR, the sworn

statement(s) of Shri CPA mentioned in the satisfaction note recorded by

the AO relate to these two (2) statements. The Ld. AR however rebutted

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 58 ::

this plea of the Ld. CIT, DR by showing us that, Shri CPA had retracted

these statements on 09.05.2017 and thereafter he was also cross-

examined by the Revenue and his statement was recorded on

06.06.2017. The Ld. AR submitted that during his cross examination, Shri

CPA had affirmed that the notings in the account book(s) belonged to him

and that he shall pay the taxes thereon. The Ld. AR showed us that, Shri

CPA along with his finance firms had also filed affidavits declaring to pay

taxes on the unaccounted income found noted in these account book(s).

He thus submitted that these retracted statements could not have been

relied upon by the AO to record valid satisfaction u/s 153C of the Act on

03.12.2018.

10.04.2017 had been retracted and also subjected to cross-examination

prior to the recording of satisfaction note by the AO, we however consider

it prudent to once examine its contents as well. Having gone through

these statements, it is seen that, Shri CPA had completely changed his

stand from his original statements dated 22.04.2016, 10.05.2016,

02.07.2016 & 28.12.2016. Though, in all his earlier statements, Shri CPA

had consistently maintained that, the account book(s) belonged to him

and the entries related to his own business, but in his statement dated

03.04.2017, he is found to have, for the first time, stated that, the

notings titled ‘RV’ denoted the assessee. When further questioned

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 59 ::

regarding the source of Rs.498 crores found credited in thirty eight (38)

finance firms of which he claims to be advisor, Shri CPA stated that, once

the entries concerning ‘RVS’ institutions [not related to the assessee] and

inter-banking transactions are eliminated, then the balance which remains

in the bank account(s) is Rs.205 crores. According to Shri CPA, these

monies were withdrawn from the bank accounts of these finance firms

and handed over to the assessee in cash through Shri Gobi (relative of

assessee). According to Shri CPA, he was only the

facilitator/broker/mediator for the assessee to facilitate receipt of

commission from coal companies who were supplying coal to TNEB. Shri

CPA submitted that, the assessee would directly talk to coal suppliers,

who would send commission to foreign-companies/companies of one Shri

PLA, and who in turn, would transfer monies to the bank account(s) of his

thirty eight (38) firms, which Shri CPA would withdraw in cash and hand

over to the assessee. Shri CPA however expressed his unknowingness to

the manner and mode in which the coal companies would allegedly pay

monies to Shri PLA but submitted that somehow he would receive the

monies in the bank account(s) of his thirty eight firms. Shri CPA further

stated that, he had met Shri PLA through his friend, Shri Giri.

fronts. He firstly submitted that, when Shri CPA in all his earlier

testimonies dated 22.04.2016, 10.05.2016, 02.07.2016 & 28.12.2016

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 60 ::

had admitted to these account books and entries therein to be exclusively

belonging and pertaining to him, then this sudden and complete

recantation of the original testimony in the above statement dated

03.04.2017 recorded u/s 131 of the Act baldly shifting the ownership of

these material to another person [assessee, in this case] without any

valid basis or corroborative evidence was unbelievable, untenable and

unjustified. The Ld. AR pointed out that, this statement was recorded

after almost a year from the date of search, when the searched person

had full access to all their seized material and was therefore capable of

narrating any tutored version qua the impugned indecipherable notings

which would suit his ulterior purpose. He pointed out that, the total

credits in the book of accounts was Rs.498 crores, out of which Shri CPA

had admitted that certain credits related to his ‘RVS’ institutions and

inter-banking transactions and only those bank credits which were

withdrawn in cash, that Shri CPA had arbitrarily attempted to shift the

onus from himself to the assessee. According to the Ld. AR, ordinarily if

the banking transactions found in the same account book(s) pertained to

‘RVS’ institutions, then ordinarily the suspicion ought to be against the

‘RVS’ institutions that the entries relating to cash withdrawals from bank

accounts also related to them. As noted earlier, Shri CPA had admitted to

several notings of banking transactions with the ‘RVS Trust’ found entered

in the same account book(s) and it is also not in dispute that Shri CPA

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 61 ::

also served as Managing Trustee of the said institution for some period.

The Ld. AR accordingly claimed that, the purported notings with code

words ‘RV’ could possibly relate to the unaccounted activities of ‘RVS

Trust’ which Shri CPA was attempting to shift to the assessee for the first

time after a year of search. The Ld. AR further contented that he learned

that, one RVS School at Trichy under the RVS Trust, had been transferred

to one Shri R Vaidialingam, by Shri CPA and then he exited from the Trust

and Shri R Vaidialingam, initials could be that of code ‘RV’ in Shri CPA’s

book. The Ld. AR showed us that, Shri R Vaidialingam was also a Minister

from the same political party with which Shri CPA was associated with,

and therefore he claimed that, it could also possibly be a case that, the

assessee was bidding to shield his transactions with Shri R Vaidialingam

and therefore misrepresent facts and mislead the authorities into

believing that the entries related to the assessee, though Shri CPA was

unable to demonstrate any cogent linkage with the assessee. The Ld. AR

further explained to us that, the assessee is commonly known as Natham

R Vishwanathan, which fact has been acknowledged by the AO in the

impugned assessment order(s) wherein the AO in the cause title has

framed the assessment in the name ‘Natham R Vishwanathan’. The Ld. AR

therefore contended that assessee is commonly referred to as ‘NRV’ and

not ‘RV’. Rather, according to him, ‘RV’ could possibly have been ‘RVS

Trust’ or for that matter Mr. R Vaidiyaligam or possibly some other person

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 62 ::

as well or Shri CPA himself. He claimed that, the searched person was

unable to discharge the burden of proof on his shoulder and show that the

entries code named ‘RV’ pertained to the assessee. And no investigation

worth the salt has been carried out to establish who is ‘RV’, instead the

AO has gulped the inconsistent/retracted statement of Shri CPA, to record

satisfaction against assessee, which action according to Ld AR, smacks of

arbitrariness. The Ld. AR submitted that, Shri CPA was well aware that,

since the application of cash withdrawal was nowhere discernible from the

account book(s), he had made a desperate attempt to paint these cash

withdrawals as unaccounted payments made to the assessee as opposed

to his own proprietary receipts from his real estate and commission

business. The Ld. AR contended that such a self-serving and biased

statement given by him without any corroborative evidence could not be

relied upon.

in the account book(s) could have possibly denoted some other institution

in which he was an active trustee or for that matter even some other

person / person(s) whom he was attempting to shield, by throwing the

assessee under the bus, we find merit in the same that, the bald

statement given by Shri CPA averring that ‘RV’ denotes the assessee

cannot be held against the assessee at its face value, without there being

any corroborative evidence/material on record, which reasons will be

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 63 ::

discussed infra. The Ld. AR brought to our notice Q No. 5 put to Shri CPA

in his statement dated 03.04.2017, wherein he was asked to give proof

that the transactions recorded in the account book(s) happened at the

instructions of the assessee. It is seen by us that, his answer was

completely vague and lacked any specific proof or details. He was unable

to provide any proof of linkage, as questioned by the Investigating

Officer. The only link explained by Shri CPA was that, he was a member of

the political party to which the assessee also belonged. According to us,

to accord probative weight to such a tenuous link would necessitate the

acceptance of a standard of relevance so broad as to be meaningless.

relative of the assessee, Shri Gobi, whom he would meet, and according

to him, Shri Gobi would give him the details of the monies to be received

from Shri PLA. Shri CPA had averred that, he was only a facilitator in this

entire modus operandi between the assessee and Shri PLA and that; he

didn’t derive any benefit from the assessee or Shri PLA for facilitating

these transactions. Again, we find that, this averment of Shri CPA

constitutes a futile attempt by resorting to extraneous or non-material

points, indicative of a failure to establish any linkage with the assessee.

Firstly, we find that this statement of Shri CPA contradicts the version

narrated by Shri PLA, which we shall be dealing in the ensuing

paragraphs. Further, the Ld. AR brought to our notice that, that Shri CPA

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 64 ::

had originally stated in his statement recorded u/s 132(4) of the Act that,

he did not have any business transactions with Shri Gobi and that he was

his personal friend, who simply happened to be distant relative of the

assessee. He invited our attention to the answer given by Shri CPA at Q

No. 19 of his statement dated 02.07.2016 that, he had got some

favors/promotion/transfer work for known persons done through him. The

Ld. AR submitted that, Shri CPA and Shri Gobi being personal friends may

have had their proprietary transactions amongst themselves but this fact

alone cannot be taken as proof to allege that Shri CPA was acting as

broker for and on behalf of the assessee, on the basis of instructions

received from Shri Gobi. We find that, apart from making bald averments,

Shri CPA was unable to offer any evidence or proof in support of his claim.

In our considered view, this purported linkage drawn by Shri CPA was

nothing but conjecture and thus inadmissible. It was also brought to our

notice that, Shri Gobi had also been searched on 10.05.2016 viz., the

same date on which Shri CPA and Shri Giri was also subjected to search.

It is not in dispute that, there was nothing incriminating found from the

premises of Shri Gobi which would suggest that he was in any manner

involved in any of alleged activities with Shri CPA or Shri Giri or that he

was handling any cash for and on behalf of the assessee. It was also

brought to our notice that, the statement of Shri Gobi was also recorded

in the course of search u/s 132(4) of the Act wherein he denied having

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 65 ::

any such linkage with Shri CPA on behalf of the assessee. We note that,

the Revenue has not been able to bring any relevant material to disprove

the statement of Shri Gobi. The Ld. DR for Revenue however pointed out

that, the noting(s) found in the account book(s) seized from Shri CPA

inter alia included five (5) entries aggregating to Rs.5,47,000/-, which

reconciled with the books of accounts/bank statements of Shri Gobi and

this fact according to her supported the AO’s case that Shri CPA was

having regular transactions with Shri Gobi, who was acting on behalf of

the assessee. She pointed out that, this transaction with Shri Gobi was

crucial evidence as pointed out by the AO to justify the linkage between

Shri CPA and the assessee. We however are unable to countenance this

proposition of the Revenue considering the facts and surrounding

circumstances. Firstly, Gobi was not assessee’s PA, but a business man,

Secondly, the entries found relating to Shri Gobi in the account book(s)

was regular business transactions forming part of books of accounts and it

is nobody’s case that they were unaccounted for. Further, the

transactions between Shri Gobi and Shri CPA across all the years was for

a paltry sum of Rs.5.47 lacs and therefore the same cannot be treated as

a relevant piece of evidence to suggest that amount(s) more than Rs.550

crores was being paid by Shri CPA to the assessee through Shri Gobi.

Moreover, there is nothing to show that the sum of Rs.5.5 lacs received

by Shri Gobi was thereafter paid to the assessee. The Ld. AR pointed out

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 66 ::

to us in this regard that, it is not in dispute that, Shri CPA and Shri Gobi

were known to each other being member(s) of the same party and

therefore both in the course of their respective businesses may have

transacted Rs.5.5 lacs in their respective proprietary capacities. This fact

by itself cannot be treated as a valid and cogent link to the assessee to

allege that the cash withdrawn by Shri CPA from the bank accounts of his

finance firms were being paid to the assessee through Shri Gobi. Having

considered the foregoing, there is force in the Ld. AR’s plea that, Shri CPA

had engaged in a vain attempt to locate support to prove that he had

transactions with the assessee, where such support is found to be

conspicuously absent in the given facts before us. Rather, the search

action conducted upon Shri Gobi and the non-discovery of any

incriminating material from his premises, corroborates the case of the

assessee that Shri Gobi was not involved in any manner with the assessee

or Shri CPA nor was he dealing in any cash collection(s), as was being

alleged/suggested by the Revenue.

apparent contradictions in the statement given by Shri CPA dated

03.04.2017 wherein he alleged making payments at the residence of

assessee. To this allegation, the Ld. AR first pointed out that it was

retracted and the revenue has cross-examined him in June 2018 wherein

he reiterated his statement recorded during search in April 2016. For

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 67 ::

argument’s sake, the Ld. AR pointed out that the inherent fallacy in the

purported proof of delivery of cash, as stated by Shri CPA. He reminded

us that Shri CPA in his original statement(s) recorded u/s 132(4) of the

Act had averred that the nothings pertain to his own business and that,

more than a year from the date of search and after recording of several

statements u/s 131 of the Act [17.06.2016, 02.07.2016 & 28.12.2016],

Shri CPA for the first time claimed that he was not withdrawing cash from

the bank accounts of the finance firms for himself, but for the assessee.

When required to adduce proof, Shri CPA had stated that he was directly

delivering the withdrawn cash to the residence of the assessee. The Ld.

AR submitted that this altogether new averment was per se unbelievable.

The Ld. AR reminded us that the assessee, at that material time was a

minister and it is common knowledge that for security reasons, his

residence was under 24*7 police protection and surveillance (CCTV /

Video recording) and therefore, if there was even an iota of truth that he

was delivering cash at assessee’s residence, then he could have easily

asked the Investigating Authorities to seize the video recordings or obtain

the surveillance records from the residence of the assessee, which could

have corroborated his claim. The Ld. AR pointed out that there was no

such adverse evidence or material brought on record. He further showed

us that the assessee had already been subjected to search u/s 132 of the

Act, much prior to this statement of Shri CPA dated 03.04.2017 and

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 68 ::

10.04.2017 and that the assessee’s search also did not yield any such

evidence, as suggested in the foregoing. According to the Ld. AR

therefore, it was prima facie clear that Shri CPA had falsely asserted

against the assessee and when he understood that his testimony

regarding the proof of delivery of cash would not withstand the test of

scrutiny / investigation, he conveniently changed his tact and improved

his testimony. The Ld. AR submitted that Shri CPA was aware that, he

may not be able to adduce any proof of direct link to the assessee and his

bluff will be called off, therefore, knowing well that his friend Gobi was a

distant relative of the assessee [and Shri Gobi had arranged temple visit

for him through assessee’s office, recommended some transfer/posting

etc], Shri CPA changed his testimony and alleged that he was handing

over the cash to Shri Gobi instead of the assessee. This material

contradictions as to the proof of delivery and the continuous shifting stand

of Shri CPA coupled with his subsequent retraction, according to the Ld.

AR showed that Shri CPA was simply misleading the Department and thus

his testimony was untrustworthy, so unbelievable. The Ld. AR further

showed us certain inherent fallacies in the narrative of Shri CPA that, the

entries in his account book(s) to the tune of Rs.205 crores denoted

entries of coal commission received from suppliers which was handed

over to the assessee. It was brought to our notice that, this figure of

Rs.205 crores stated by Shri CPA was the summation of the aggregate

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 69 ::

sum of cash which was withdrawn from the bank accounts of his finance

firms, whose entries were also appearing in his account book(s). Taking

us through the contents of the seized account book(s), the Ld. AR showed

us that the net entries corresponding qua the withdrawals and the code

‘RV’ was not even Rs.21 crores. According to the Ld. AR, this material fact

bellies the allegation of Shri CPA that, he had delivered cash of Rs.205

crores to the assessee/Gobi. The Ld. AR further pointed out that, there

were both credit as well as debit entries recorded against the ‘RV’

indicating monies coming and going out qua ‘RV’. The Ld. AR argued that,

why would the assessee, who was the alleged beneficiary of the monies

would regularly make payments back to Shri CPA, who as per his own

version, was only a conduit who was collecting monies and handing it

over to the assessee. The Ld. AR submitted that, if Shri CPA was simply

withdrawing and delivering the cash then ordinarily there ought to have

been only debit entries, viz. monies going out to him and no credit entries

ought to have been there. Having perused the seized account book(s), it

is seen that, there were regular debit and credit entries against the title

‘RV’, which ordinarily would suggest of someone with whom Shri CPA had

regular business transactions. The entries does not apparently insinuate

that Shri CPA was only an agent who was collecting and paying the

monies to the assessee. Had that been the case, no credit entries would

have ordinarily been there in the account book(s) and raises a question

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 70 ::

mark as to accepting the allegation as it is against assessee. No attempt

was made by AO to elicit an explanation about this contradiction in the

noting’s vis a vis allegation against assessee. Rather, the regular manner

in which both debit and credit entries appeared against the title ‘RV’

abrogates the narrative of Shri CPA, which appears to be fable and

fanciful story cooked up to shield his actual transactions. To buttress his

above submission, the Ld. AR then countered Shri CPA’s assertion that

the entries in account book(s) against ‘A Co’ denoted the monies coming

into the finance firms from the suppliers. The Ld. AR showed us from the

same account book(s) that, apart from credit entries appearing against ‘A

Co’, there were also debit entries therein succeeding the entries relating

to the monies withdrawn from the bank accounts of the finance firms,

which indicated that the monies withdrawn were being paid back to the

alleged ‘A Co’. It was brought to our notice that, the debit entries

reflecting payment made to the alleged ‘A Co’ aggregated to Rs.62 crores

approx. The Ld. AR made us wonder as to why any received of

commission would return back to the to the payer who was supposed to

be shelling out the commission. These debit entries of payments totalling

to Rs.62 crores back to A Co renders the version narrated by Shri CPA to

be unbelievable. There is no reasonable explanation forthcoming from

Shri CPA as to why was there were debit entries indicating monies

withdrawn from bank account of finance firms being paid back to the

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 71 ::

same supplier ‘A Co’. According to us therefore, the tale recited by Shri

CPA does not add up. The Ld. AR has rightly submitted that, it is

preposterous and against all human probabilities that, the person in

receipt of commission would pay the same back again to the payer of

commission and that too on regular basis. Hence, we agree with the Ld.

AR that, the entries in account book(s) shows that, what is being tutored

by Shri CPA before the authorities smacks of falsehood and spuriousness.

The Ld. AR has therefore claimed that, the entries in the account book(s)

did not add up to the story of Shri CPA in as much as it did not indicate

receipt of monies from one person [supplier] and payments to another

[assessee, in this case]. Rather, it inter alia suggested regular transfer of

monies, both debit and credit, amongst some persons, whose identities

have not been proved. Perusal of these entries ex-facie disproves the

narrative of Shri CPA that all the entries were being made on someone

else’s behalf. Instead, it appears to indicate that it was a record of Shri

CPA’s own proprietary transactions. For this, the Ld. AR reminded us of

the nature of payments, as discussed in Para 51 above, which

demonstrated that, the payment/debit entries corresponding to the

entries relating to monies withdrawn from the bank accounts of the

finance firms were actually being used by Shri CPA for his own business

purpose. This material fact, pointed out to us by Ld. AR, repudiated Shri

CPA’s assertion that he was only a conduit who was receiving monies

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 72 ::

from one person [suppliers] and handing it over to another person

[assessee, as alleged in his case]. We also find that, Shri CPA in his

answer to Q No. 10 of his statement dated 10.04.2017 had admitted to

paying on-monies for the immovable properties acquired in the names of

his family members. Hence, it is seen that, the application of cash

withdrawn from the bank accounts of the thirty eight concerns was not

towards alleged payment to the assessee. Instead, it is prima facie

discernible that, it was being applied by Shri CPA for his own benefit. The

Ld. AR also brought to our notice the answer given by Shri CPA to Q No. 4

in his statement dated 10.04.2017 wherein he had admitted to aggregate

unaccounted income & investment of Rs.71.67 crores. The Ld. AR

explained that, if Shri CPA was not deriving any benefit in any form, from

the purported notings found in the account book(s) as they purportedly

solely related to the assessee [Refer answer to Q No. 5 of statement

dated 03.04.2017], then how could Shri CPA have made such huge

magnitude of unaccounted investments in his own personal capacity. We

find merit in the contention of the Ld. AR that, if the statement(s) of Shri

CPA is read as a whole, along with the entries in account book(s), it was

evident that, Shri CPA was undertaking large scale unaccounted real

estate & finance business in his own right and was dealing in several

crores withdrawn from the bank account(s) of the finance firms in his own

proprietary capacity. There is yet another intriguing aspect brought to our

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 73 ::

notice by Ld AR. He pointed out from the assessment order that, the AO

had inferred that coal commission allegedly being paid was at USD 2 per

MT. Keeping this in mind, the Ld. AR invited our attention to the reply

furnished by TANGENCO wherein they had inter alia provided the details

of the coal delivered by several suppliers. The Ld. AR pointed out that, the

two purported suppliers i.e. ‘A Co.’ & ‘K Co’ had supplied coal weighing

34,94,199 MT and 76,750MT respectively in FY 2014-15. Applying the

alleged rate of USD 2 per MT, the Ld. AR showed us that, the alleged

commission payable would work out to Rs.44.47 crores for FY 2014-15.

He now invited our attention to the entries in the seized account book(s)

and showed that the entries against the title ‘RV’ [as also quantified by

the AO] was to the tune of Rs.270 crores approx, which was 600% of the

alleged quantum of commission. Likewise, he also illustrated similar

calculation for FY 2015-16, wherein the purported commission

corresponding to the quantum of coal supplied by the suppliers works out

to Rs.55.75 crores, whereas the commission quantified by the AO from

the seized account book(s) was Rs.247.31 crores. Having regard to the

foregoing, it does appear that there was no prima facie correlation

between the entries found in the seized account book(s) vis-à-vis the

corresponding coal supplied or the possible coal commission, payable

thereon, if at all such was the case. It is observed that, the AO before

recording his satisfaction did not even any attempt to unravel the truth by

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 74 ::

conducting impartial investigation. Rather, we find that, the AO treated

whatever Shri CPA stated to be gospel truth, without any independent

examination of facts or application of mind. The above contemporaneous

aspects pointed out by the Ld. AR does makes it implausible for us to

believe the averments made by Shri CPA in his statements dated

03.04.2017 & 10.04.2017 attempting to incriminate the assessee. We find

that, though the above gaping holes in the statements dated 03.04.2017

& 10.04.2017 of Shri CPA was prima facie discernible from the seized

material, but the AO failed to take note of these apparent contradictions.

Instead, the AO is found to have simply gulped down whatever was being

served by Shri CPA who kept changing his statements/affidavit filed by

him. Having considered the foregoing contradictions and fallacies, as

pointed out by the Ld. AR, we agree with him that, it was unsafe to rely

on these fleeting statement(s) dated 03.04.2017 & 10.04.2017 as it was

riddled with inconsistences, bald allegations and contradictions. Overall

therefore, having regard to the above intriguing aspects brought to our

notice by the Ld. AR, it can’t be said that Shri CPA has discharged the

statutory presumption of fact u/s 132(4A)/292C(1)(i) of the Act and

hence, the AO erred in recording in the satisfaction note that books seized

from the premises of Shri CPA belonged to assessee. The AO failed to

bring any material on record to disbelieve the original statement of Shri

CPA dated 22.04.2016 wherein he had admitted that the account book(s)

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 75 ::

ID marked ANN/FAY/CPA/B&D/S-1 and the notings found therein

belonged to him.

making allegation against assessee after an year of search in his

premises. According to him, the searched person [Shri CPA, in this case]

was aware that, the contents of these seized materials were to be

presumed to be true qua his income-tax assessment in terms of Section

132(4A) of the Act and hence these notings on stand-alone basis would

have entailed substantial tax liabilities on him. However, according to the

Ld. AR, what Shri CPA did not foresee was that he would be faced with

consequences under other regulations such as PMLA, FEMA violations etc.

as well. The Ld. AR submitted that, the Revenue had subsequently [within

few days] searched his associates/friends i.e., Shri Giri & Shri PLA and

unearthed large-scale movement of funds amongst them in connection

with their own businesses activities. The Ld. AR was of the opinion that,

Shri CPA being aware that, both of them had implicated him and had

stated that they were routing monies at his instructions, he would not

only be faced with serious tax implications but other regulatory

consequences as well, a new theory was promulgated by Shri CPA (more

than a year after the date of search) which was evidently a biased one to

shift the entire onus and blame onto the assessee and tailor-made to suit

his purpose to reduce the tax incidence on himself as well wriggle out of

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 76 ::

the clutches of other law-enforcement agencies and create chaos and

confusion in the mind of AO.

that Shri CPA had baldly stated that (a) these notings did not pertain to

him but the assessee, (b) these were details of transactions between Shri

PLA and assessee, but feigned ignorance about its details and specifics,

(c) he did not derive any benefit from these transactions, but he was

maintaining records and coordinating on their behalf pro bono and (d) he

was unaware about the origin of these monies but it was somehow

received by him in his controlled bank accounts and also used by him for

making investments. We agree with the Ld. AR that, this statement of

Shri CPA was evidently an after-thought, tutored and based on

interestedness, sans any believable or reliable material/evidence.

According to us therefore, such an apparent self-serving statement could

not be used against the assessee. Having considered the foregoing and

having due regard to the earlier admission(s) dated 22.04.2016,

10.05.2016, 02.07.2016 & 26.12.2016, we find force in the submissions

of the Ld. AR that the statements dated 03.04.2017 & 10.04.2017 given

by Shri CPA does not inspire confidence, and is found to be based on

incompetence and self-serving, which was tailor made to suit his own

purpose. Hence, these statements cannot be relied upon as it is not free

from blemish.

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 77 ::

The Ld. AR otherwise also raised serious doubts on the objectivity 58.

and credence of this investigation. Recapitulating the chronology of

events already discussed above, the Ld. AR submitted that, when the

seized material did not in any manner indicate the assessee and even Shri

CPA in his sworn statement(s) recorded at the time of searches and on

several occasions had never named or implicated the assessee, then

according to him, a pertinent question arises as to why all of a sudden,

Shri CPA was again summoned more than a year after the search had

concluded and again another statement was recorded from him. The Ld.

AR submitted that, the Revenue has not been able to give any plausible

circumstances or justification for this personal enquiry being again

conducted on 03.04.2017 against Shri CPA after almost a year from the

date of search, even though Shri CPA had consistently averred in his

sworn statement(s) that the seized material belonged and pertained to

him and Shri CPA had also accepted to pay taxes on the appropriate

income emanating from these account book(s). The Ld. AR then reminded

us of the leading question which was put across to Shri CPA in his original

statement dated 22.04.2016 wherein the Investigating Officer had directly

named the assessee and had required Shri CPA to explain whether the

notings in account books related to the assessee, to which Shri CPA had

categorically answered in the negative. According to the Ld. AR, this

recording of statements on 03.04.2017 & 10.04.2017 may also have been

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 78 ::

an attempt made by the Revenue with a prejudiced mind to somehow

implicate the assessee, though neither the seized material nor the

statement(s) recorded from the searched person(s) suggested anything

adverse qua the assessee. Though having taken note of these arguments,

we do not see any reason to dwell on the same, having already held

above that, the statements dated 03.04.2017 & 10.04.2017 [since

retracted] to be unreliable.

his statement(s) dated 03.04.2017 & 10.04.2017 and stood by his

original testimony given at the time of search u/s 132(4) of the Act. We

find from the retraction affidavit duly sworn by Shri CPA before the Notary

Public on 09.05.2017 that he had not only reaffirmed his original offer of

undisclosed investment/income of Rs.77 crores but also stated that,

whatever he had stated in his statement(s) dated 03.04.2017 &

10.04.2017 was factually wrong and out of mental duress. It is seen that,

he had also offered to tax the sum of Rs.205 crores received by his

finance firms in their respective hands. The relevant extract of this

retraction affidavit, is reproduced below: -

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 79 ::

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 80 ::

had again summoned Shri CPA on 06.06.2017 for cross-examination and

this time the Investigating Officer is noted to have tabulated the noting(s)

found in the account book(s) in a year-wise manner and Shri CPA is noted

to have expressly stated that the sum of Rs.205 crores received by the

finance firms were their respective unaccounted income(s) and he

accepted to pay taxes on the same. The relevant portion of the statement

is reproduced below:-

“Q.3. During the Income Tax search proceedings, conducted at your residence on 22-04-2016, From the books of accounts seized vide ANN/FAY/CPA/B&D/S-1 dt.23-04-2016, the details of unaccounted income for F.Y.2014-15, the names and the total amount are listed hereunder:

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 81 ::

Read and give your explanation. List 2014-15: RV – II 16,00,00,000 RV- 1(Per) 1,00,00,000 RV Party Found 7,06,99,000

Gobi (RV) 65,60,90,060 Gobi (RV)-II 80,00,000 Gobi Dubai 22,65,00,000 Lodha HL 30,00,000 Thathu 20,00,00,000 Lodha 56,50,00,000 Total 189,92,89,060

Mathalai Muthu 10,00,000 VL Account 5,58,21,222 Malleswaran 3,756,000 Sakthivel AE (RR) 5,00,000 RVS School 1,31,73,124 TNPL 63,61,330 Muthusamy Er 10,00,654 R.R.Er 45,00,000 Meenakshi Mission 5,11,20,000 KCP Karur 50,00,000 Kathappan, Natham 20,00,000 Senthilnatham Vigneswara 15,00,000 Rama Moorthy Ceylon 1,00,00,000 Total 15,23,51,330

FY 2015-16:

Advance 33,55,991 Balance Cash 7,50,369 Cash 26,500 Cash Returned 1,00,000 Chit 92,20,500 Commission 35,000 HL 49,67,52,107 Home Cash 214,62,38,050 Interest 31,13,000 Interest 4,09,48,520 Interest repayment 74,13,000 Land sale 11,73,750 Lease amount 50,000

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 82 ::

Principal 30,000 Principal repayment 8,74,10,000 Receipt 119,47,79,779 Sale 11,90,000 Sale advance 11,00,000 Withdrawal bank 179,36,72,417 Total 578,73,58,983

List FY 2016-17: 01.04.2016 – Opening Balance 2,70,674 Receipt – Sivasamy 1000 Home Cash 1,75,00,000 Home Cash 25,00,000 Home Cash 3,00,00,000 04.04.2016 Home Cash 2,00,000 07.04.2016 Home Cash 9,00,000 08.04.2016 Interest – velmohan 1,00,000 Receipt Asian pipes (Dr.Nedunjezhiyan) 15,00,000 09.04.2016 interest – uppupalayam 300 Total 5,36,01,300

The above listed transactions happened through whom, for whom and when did it happen.

Ans: As I have already submitted in my affidavit, out of Rs.578 Crores mentioned in the list above for F.Y.2015-16, Rs.205 Crores are unaccounted income of 40 Finance firms, for which I accept to pay tax. I am not in a position to submit the details of accounts, for the balance amount of Rs.373 crores. I shall consult my Accountants, Thavamani and Ganesan and give my submissions in three months. Further, I shall submit the details of transactions of F.Y.2014-15 & 2016-17 within three weeks.”

also asked to clarify whether he had any relations with TNEB and whether

he facilitated receipt of coal commission, to which he answered in the

negative. The relevant question and the answer given by Shri CPA is

noted as under:-

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 83 ::

“Q.No.6 Did you function as a coal commission agent for TNEB or in any other position. Give the details.

Ans. I am not in any position or commission agent with TNEB. Further, I do not have any connection with the officers of TNEB.”

the cross-examination held by the Revenue, even the partner(s) of all the

finance firms had voluntarily filed their respective sworn affidavit(s) all

dated 03.08.2017 wherein they affirmed the disclosure given by Shri CPA

and agreed to pay taxes on the monies received from the entities of Shri

PLA. It is seen that, later on, letters were also filed in September 2017

wherein the partner(s) of the finance firms reiterated their offer and also

stated that they were mobilizing funds to pay the taxes. It was brought to

our notice that, after this cross-examination held in June 2017 and the

filing of disclosure affidavits by the partners of the finance firms in

September 2017, no further enquiry or investigation was conducted by

the DDIT / AO of the searched person. The next crucial event which

occurred was on 03.12.2018, when the AO recorded his satisfaction that,

the seized material ID marked ANN/FAY/CPA/B&D/S-1 ‘belonged to’ the

assessee and had a bearing on the total income of assessee, which

triggered the impugned action u/s 153C of the Act.

discussed above, it is seen that, Shri CPA had, at all times, maintained

that the account book(s) ID marked ANN/FAY/CPA/B&D/S-1 belonged to

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 84 ::

him and the notings therein (including ‘RV’) pertained to his own business

activities. Even the content(s) of the notings and the undisclosed

investments unearthed in the course of search corroborated his statement

recorded u/s 132(4) of the Act that, these notings pertained to him and

not the assessee. It is also seen that, the amount(s) received by the

finance firms were managed and controlled by Shri CPA and the

respective finance firms had offered to pay tax on such receipts to tax. It

is also seen that, not only Shri CPA had originally denied have any

relation with the assessee but the only time when he had implicated the

assessee to be the person denoted by the noting ‘RV’, Shri CPA was

unable to give any cogent proof of link with the assessee in support of the

same. Moreover, as observed earlier, Shri CPA had also retracted this

statement and reiterated that the notings pertained to him and offered to

pay tax thereon.

action of the AO holding that the impugned seized material viz.,

ANN/FAY/CPA/B&D/S-1 belonged / related to the assessee was factually

perverse. Also, the averments made by the AO of the assessee in the

satisfaction note viz., Shri CPA had admitted that, the notings in the

seized material, particularly ‘RV’, pertained to the assessee, is erroneous

and contrary to the facts as discussed above.

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 85 ::

Before us, though the Ld. CIT, DR appearing for the Revenue was 65.

unable to controvert the fact that Shri CPA had retracted his statement(s)

dated 03.04.2017 & 10.04.2017 and had affirmed his retraction in the

course of cross-examination held on 06.06.2017, but he vehemently

relied on a subsequent letter dated 28.12.2018 filed by Shri CPA before

the AO of the assessee in the course his assessment u/s 153C of the Act

[i.e. an event after the recording of satisfaction on 03.12.2018 to proceed

against assessee u/s 153C] which submission of Revenue is noted for

being rejected for the reason given infra. It is seen that, Shri CPA had

again recanted from his retraction, changed his stand, and once more

stated that, the noting(s) in the account book(s) were being maintained

by him for and on behalf of the assessee and that all the notings

concerned the coal commission received by Shri CPA on behalf of the

assessee. The Ld. AR has rightly submitted that, this letter having been

filed by Shri CPA subsequent to the initiation of proceedings u/s 153C of

the Act has to be ignored by us, when examining the validity of the

satisfaction recorded prior to issuance of notice u/s 153C of the Act dated

03.12.2018. According to us, when this letter was not available either

before the AO of Shri CPA or the assessee at the material time(s) when

the satisfaction was recorded on 03.12.2018, the Revenue cannot now

supplement their satisfaction recorded u/s 153C before this Tribunal, by

relying on such subsequent letter of Shri CPA. For this, we rely on the

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 86 ::

ratio laid down by Hon’ble Apex Court in the decision(s) of NDTV Ltd &

Bombay High Court in Hindustan Lever Ltd., as discussed (supra) and

hold that, this letter dated 28.12.2018 [submitted by Shri CPA post

recording of satisfaction by the AO] cannot be relied upon by the Revenue

to justify the initiation of proceedings u/s 153C of the Act

28.12.2018 submitted by Shri CPA more than two years after the date of

search is nothing but an after-thought and thus ought to be discarded. He

pointed out that, the income-tax assessment(s) of Shri CPA was also

ongoing wherein ordinarily Shri CPA was required to honor his disclosure

given vide his sworn affidavit dated 09.05.2017. According to Ld. AR, Shri

CPA had discernibly failed to pay the agreed taxes and therefore as a last-

ditch attempt, and at the fag-end of the assessment proceedings, he had

filed this letter disowning the content(s) of the seized account book(s)

found from his premises which contained noting(s) relating to his business

activities [already taken note of by us above]. Instead, he again baldly

incriminated the assessee by attempting to shift the ownership of these

account book(s) to the assessee without any evidence or proof. The Ld.

AR has rightly relied on the decision of the Hon’ble Rajasthan High Court

in the case of Pr.CIT Vs Roshan Lal Sancheti (150 taxmann.227)

wherein on similar facts, it was held that, the statement recorded u/s

132(4) and later on confirmed u/s 131 of the Act cannot be discarded

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 87 ::

simply because the assessee had later on retracted the same. It was held

that, duration of retraction assumes significance and that where retraction

is made after a long gap [in the present case, from statement recorded

u/s 132(4) in April 2016, more than two years elapsed as on

28.12.2018], then such retraction without cogent reasons are not

entertainable, which is absent in this case. The only plea of Shri CPA to

first retract on April 2017, after an year, to allege against assessee, was

that the assessee was a minister in April 2016, so he didn’t made

allegation against assessee at the time of search. But the Ld AR,

countered such an explanation to justify retraction and brought to our

notice that assessee was a minister only till 22 May 2016 [i.e. less than a

month from the date of search at Shri CPA’s premise] and that assessee

wasn’t a minister in the State thereafter. Therefore, the Ld AR wondered

as to why Shri CPA didn’t retract at the earliest point of time if there was

any truth in it and ought to have made allegation against assessee when he was not minister from 23rd May 2016 onwards. Hence according to Ld

AR, the delay of an year to first make allegation against assessee in April

2017 and then subsequent conduct of Shri CPA, viz retract the allegation,

file affidavit in support of it and again retract the retraction in

28.12.2018, doesn’t justify the so called retraction and is therefore

unbelievable and needs to be discarded and at any rate according to him,

it is unsafe to place reliance on it and the AO erred in placing reliance on

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 88 ::

such untrustworthy testimony which vitiates the satisfaction-note

recorded against assessee u/s 153C. In this context, it is gainful to look at

the relevant findings of the Hon’ble High Court in Roshan Lal Sancheti

supra which is as follows:-

“In view of the law discussed above, it must be held that statement recorded under section 132(4) of the Act and later confirmed in statement recorded under section 131 of the Act, cannot be discarded simply by observing that the assessee has retracted the same because such retraction ought to have been generally made within reasonable time or by filing complaint to superior authorities or otherwise brought to notice of the higher officials by filing duly sworn affidavit or statement supported by convincing evidence. Such a statement when recorded at two stages cannot be discarded summarily in cryptic manner by observing that the assessee in a belatedly filed affidavit has retracted from his statement. Such retraction is required to be made as soon as possible or immediately after the statement of the assessee was recorded. Duration of time when such retraction is made assumes significance and in the present case retraction has been made by the assessee after almost eight months to be precise, 237 days.

that, Shri CPA has essentially reiterated what he had stated in the

statement(s) dated 03.04.2017 & 10.04.2017 [which he retracted/filed

affidavit/withstood the cross of AO to retract what he stated on

03.04.2017 & 10.04.2017 discussed supra]. We have already discussed

the apparent contradictions and infirmities in this theory advanced by Shri

CPA, in the preceding paragraphs and therefore do not wish to repeat the

same. It is observed that, even in this letter, Shri CPA was unable to

show any proof or provide any corroborative linkage with the assessee

qua suppliers. No reliable material to show flow of money from the coffers

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 89 ::

of suppliers of coal via him (CPA) to the hands of assessee is found

missing, which undermines the spear-head of the narration of case setup

by him against assessee. Rather, his averments are found to be

unbelievable, since it cannot be ruled out that it is an outcome of tutoring

and afterthought. The narration setup by him is bald and duplicitous, with

the intent to implicate public functionaries and reputed business houses

by making empty sensationalized claims, which untrustworthy

statements, cannot be acted upon against assessee, without dislodging

the statutory presumption on the searched person and the AO erred in

placing reliance to it and record satisfaction that books seized from

premises of Shri CPA belonged to assessee.

the Paras 3 & 4 of the satisfaction note wherein the AO had taken note of

the statement(s) given by Shri Giri and Shri PLA, which according to him

corroborated the statement of Shri CPA dated 03.04.2017 and

10.04.2017 [retracted as on date of recording satisfaction-note on

03.12.2018] that, he was only facilitating the receipt of commission

through these persons, for and on behalf of the assessee and therefore

the notings found in account book(s) actually related to the assessee. We

find that, a joint-search action was conducted upon Shri CPA and Shri Giri

on 10.05.2016 at the ITC Windsor Hotel, Bangalore, in the course of

which electronic data was found and seized from both these searched

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 90 ::

persons, and their sworn statement(s) were also recorded. We first take

up the statement(s) of Shri Giri, which was recorded across several dates,

copies of which has been placed at Pages 87 to 117 of Paper Book

Volume VI.

facilitating routing of commission through Shri PLA for and on behalf of

the assessee, which corroborated the statement of Shri CPA as well.

Refuting this assertion of the Revenue, the Ld. AR for assessee took us

through the entire contents of the statement(s) of Shri Giri. We first note

that, when enquired about his nature of business activities in which he

was involved, like Shri CPA, Shri Giri had also stated that he was also

involved in the business of real estate, conducted through his company

M/s Straived Ventures Pvt. Ltd. Shri Giri is found to have stated that, Shri

CPA is his friend who is also in the business of real estate and is running

educational institutions. The Ld. AR pointed out that, when the

Investigating Officer had enquired Shri Giri about his connection with Shri

CPA, he had not admitted that either he or Shri CPA was involved in any

facilitation of coal commission. It is also seen that, Shri Giri in his initial

answers did not name the assessee or suggest that Shri CPA was running

finance firms for and on behalf of the assessee. Rather we find that, when

enquired about the nature of finance firms of Shri CPA, Shri Giri is found

to have stated that, he was not even aware of their exact names. The Ld.

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 91 ::

AR brought to our notice that, after recording of this initial statement, the

Investigating Officer had adjourned the same and the recording of his

statement was resumed late at night, at 11:30 pm. This time, Shri Giri

was required to explain his business transactions with Shri CPA. The

relevant question put to him and his answer is extracted below:

“Q-18 Do you have any business relation or financial transaction with Mr. Anbunathan C P? If yes please explain in detail.

Ans. My association as stated above started since the year 2013 wherein one of my client Dr. Gurushankar, Vice Chairmen of Meenakshi Medical Mission Hospital, Madurai approached me to exchange Meenakshi Medical Mission Hospital's multiple demand draft to the tune of Rs. 25 Crores, to encash it to use it in a land deal. Therein I introduced Mr. C.P.Anbunathan as a financer based at Karur, who receives demand draft in the name of his multiple companies/firms-and in turn provides cash, after deducting-5% of his commission-charges for the transactions As Dr. Gurushankar was interested in this type of transaction, he has given multiple DD since late 2013 to Mr. C P Anbunathan who had routed the funds through his various concerns such as M/s Global Equipment, M/s Kavi Traders, M/s Kundan Traders etc. Our oral agreement was that my share will be 1% of the total transactions. I received commission of Rs. 25 Lakhs from Mr. Anbunathan-in-multiple slots, out of this transactions and that's how, I have started my business relation with my Mr. Anbunathan. Mr. Anbunathan was very much impressed in this deal and he wanted to take this business relationship to the next level.”

suggest that he was involved in facilitating any alleged coal commission,

the Investigating Officer is noted to have enquired from him about the

‘next level of your business with Mr. Anbunathan’. It is observed that, this

time, Shri Giri submitted that, Shri CPA had enquired from him whether

he was close to one, Shri PLA as he was to receive certain sums from the

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 92 ::

A Co. According to Shri Giri, he had introduced Shri CPA to Shri PLA and

when the latter assured links with A Co, Shri CPA entrusted Shri PLA to

arrange transfer of funds from A Co to his finance firms, for and on behalf

of the assessee. Shri Giri is found to have also conveniently stated that,

he did not derive any benefit or commission for facilitating this

transaction. When enquired as to how was this transaction executed, Shri

Giri is found to have made vague assertions that, the funds were

transferred in multiple slots through multiple companies, which in turn

was transferred by the entities of Shri PLA to the finance firms of Shri

CPA. According to Shri Giri, his role was only to coordinate and make sure

that all the funds were transferred to Shri CPA. He further submitted that,

out of the total monies facilitated, he had also coordinated transfer of a

sum of Rs.4 crores by Shri PLA to a foreign bank account of Shri CPA.

Giri to Q No. 19 and pointed out that, he had actually named the assessee

solely on hearsay as because it was Shri CPA who had purportedly

informed him that the monies to be routed were on the assessee’s behalf,

and Shri Giri has gulped it as gospel truth and then he introduced Shri

CPA to Shri PLA. The Ld. AR has rightly shown that, such a statement of

Shri Giri is not reliable being hearsay because, he has not directly seen or

heard anything from the assessee, hence, it is unsafe to rely on such

hearsay statement of Shri Giri, unless there was any material or tangible

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 93 ::

link provided by Shri Giri in this regard. Taking us through the other

answers given by Shri Giri, the Ld. AR showed us that, all his

transactions, dealings and conversations were with Shri CPA alone and

that, Shri Giri was unable to make out any connection or relation or any

link with the assessee.

Giri was fanciful, far-fetched and improbable. He submitted that, if for a

moment, the Revenue’s allegation against the assessee is taken at its

face value, then it is highly implausible that, the assessee who was a

minister would have given such a task to Shri CPA to go around and find

out if anyone knows the coal-suppliers and then use their connection for

collecting the purported commission. Thus according to Ld AR, the modus

operandi as narrated by Shri CPA and role played by Shri Giri along with

Shri PLA, defies logic. According to Ld AR, the modus-operandi narrated

by Shri CPA is not comprehensible. On one hand Shri CPA says that he

was asked by assessee to collect the coal-commission, in such an event,

according to Ld AR, Shri CPA should be expected to know the coal-

supplier which was a reputed group in their own right and instead he had

to scout for and approach Shri Giri a local person to enquire about them

to make a connection with them. Further, according to Ld. AR, it was also

incongruous that Shri CPA would have asked Shri Giri whether he knows

someone called Shri PLA as he is required to receive monies from a

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 94 ::

certain supplier who supplied coal to TNEB. According to him, if Shri CPA

knew about Shri PLA and the fact that he had links with the supplier, then

there was no need or purpose to enquire about him from Shri Giri. The

Ld. AR pointed out that, it was also not a case that Shri PLA was in any

manner related to the supplier(s) and therefore on preponderance of

probability, it is unsafe to accept Shri Giri’s testimony that Shri PLA could

have possibly assured links with the suppliers, particularly when it is seen

that Shri PLA in his testimony dated 28.06.2016 [Q No. 41] had denied

having any such link with the coal suppliers. It was also brought to our

notice that, Shri CPA had already dealt with Shri PLA which involved real

estate deal of 200 flats for a value of Rs.50 crores and therefore Shri

Giri’s testimony alleging that Shri CPA did not know Shri PLA and that he

had only facilitated their meetings was ludicrous and unreliable. This

argument of the Ld. AR is also supported by the testimony of Shri PLA

wherein he had clearly stated that he was known to Shri CPA as he had

met him long back for solar projects, though it did not materialize. Having

considered the foregoing, we find this particular answer given by Shri Giri

wherein he had named the assessee is hearsay as well to be filled with

infirmities and gaping holes.

same answer viz., he had only introduced Shri CPA to Shri PLA and that

he was not involved in their transactions and therefore did not derive any

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 95 ::

commission or benefit therefrom. According to Ld. AR, this testimony was

factually wrong as Shri Giri was later on found to have been actively

involved with them and he was regularly exchanging email

correspondences with them regarding routing of funds for Shri CPA. It

may be added, at this juncture, that these email correspondences also did

not contain any link with the assessee, which we shall deal in the ensuing

paragraphs. He also pointed out that, there were several notings with the

acronym ‘Giri’ in the account book(s) of Shri CPA with corresponding

details of payments/receipts, which according to Ld. AR showed that, Shri

Giri was indeed deriving monetary benefits from the transactions being

conducted amongst Shri CPA, Shri PLA and him. According to Ld. AR, this

evidently exposes the false assertion/narration made by Shri Giri, which

raises serious doubt on the veracity of his answer given to Q No.19 and

rather showed that, it was a fanciful theory surmised by Shri Giri to

escape from the rigors of tax consequences.

contradictions in the statement of Shri Giri, which according to him,

rendered it unsafe to be relied upon. He first reminded us that, Shri Giri

and Shri CPA were searched together in the same premises i.e. ITC Hotel,

Bangalore on 10.05.2016 and both their statements were recorded u/s

132(4) of the Act. He pointed out that, Shri CPA had categorically stated

that, he was only doing real estate transactions and other commission

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 96 ::

business with Shri Giri; whereas Shri Giri had stated that, apart from

conducting some few commission related activities for encashment of

demand drafts and introducing Shri CPA to Shri PLA, he did not have any

other business related transactions with Shri CPA. According to Ld. AR

therefore, the contradictory answers given by Shri Giri showed us that, he

was attempting to hide the true nature of his proprietary transactions

between him and Shri CPA and shift the onus to third parties [as noted

above, acronym ‘Giri’ has been found noted at several places in note

book(s) seized from the premises of Shri CPA]. Another striking

contradiction pointed out by Ld. AR was that, unlike Shri Giri, when Shri

CPA was confronted with the electronic data found from the same

premises, he had not averred that, they related to any coal commission

received for the assessee through Shri PLA.

sworn statement(s) of both these persons showed that, Shri Giri had

assisted Shri CPA in encashing demand draft of Rs.25 crores for

Meenakshi Medical Mission Hospital for using it in a land deal for which he

derived commission of 5% for facilitating this transaction. Shri Giri had

thereafter admitted to have provided regular assistance in routing of

funds to Shri CPA into his various finance firms, for which, he would

receive commission of 1%. According to the Ld.AR, these averments of

Shri Giri were also corroborated by the notings found in the account

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 97 ::

books of Shri CPA, which showed that Shri CPA and Shri Giri were

business associates engaging in several business transactions in their own

right. According to him, ordinarily any person would maintain separate

records of his own proprietary transactions and where he undertakes

transactions on someone else’s behalf. Bringing us back to the content(s)

of the account book(s) viz., ANN/FAY/CPA/B&D/S-1, the Ld. AR showed

us that, the entries relating to Meenakshi Medical Mission Hospital and

other dealings of the finance firms, RVS institutions etc. were all recorded

in the same ledger where the monies received from PLA was recorded. He

argued that, if it is assumed for a moment that the monies routed

through Shri PLA related to someone else, it would be incongruous to

maintain mixed accounts as it would not be possible to segregate the

transactions. The Ld. AR thus submitted that, the monies routed through

Shri PLA by Shri CPA is indeed his own business transactions amongst

Shri PLA, Shri Giri & Shri CPA, and they do not relate to any third person

[assessee, in this case]. Having considered these arguments, we find

sufficient force in the same.

The Ld. AR further showed us that, according to Shri CPA’s 76.

statement, the assessee had directly dealt with the coal suppliers and that

he had only dealt with Shri Gobi; whereas according to Shri Giri, it was

Shri CPA who has actively taken steps to approach the top management

of the coal suppliers regarding payment of commission and that he was

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 98 ::

following-up and coordinating the entire transactions. The Ld. AR further

brought to our notice that, Shri CPA had stated that, the transactions

were between the assessee and Shri PLA and that he was only a conduit

who would only hand over the monies, when received in his controlled

bank accounts. On the other hand, Shri Giri had stated that, the

transactions were between Shri CPA and Shri PLA and that Shri CPA would

actively pursue these transactions. Also, Shri CPA had stated that, he did

not derive any benefit or income by facilitating these transactions

between the assessee and Shri PLA, whereas Shri Giri stated that, he was

the one who did not derive any benefit from these transactions. We

further observe that Shri CPA’s statement averring that, he did not earn

any income from these transactions, was contradicted by the answer

given by Shri Giri [Q No.20], wherein he had admitted that, he had

transferred sum of Rs. 4 crores through Shri PLA into the personal foreign

bank account of Shri CPA. We thus find that, the sworn statement of Shri

Giri did not support the statement of Shri CPA and the answers given by

both of them were solely motivated by self-preservation, and is thus held

to be inherently unreliable.

Our above observation is corroborated by the fact that, subsequent 77.

to conclusion of search on 10.05.2016, the Investigating authorities had

scrutinized the electronic devices and found that the statement given by

Shri Giri suffered from falsity as he had stated that he was not involved in

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 99 ::

the transactions conducted between Shri CPA and Shri PLA, but they had

found email exchanges amongst these persons which showed that Shri

Giri was complicit in their unaccounted transactions. When confronted

with the same on 13.05.2016, we find that, Shri Giri had recanted his

earlier answer and now stated that, he was the one who had reached out

to Shri PLA on behalf of Shri CPA and would exchange mails regarding the

transactions. Shri Giri is noted to have then narrated an altogether new

version explaining how Shri CPA met Shri PLA for facilitating routing of

coal commission for and on behalf of the assessee. According to Shri Giri,

Shri CPA had enquired about a company in Delhi, to which he mentioned

that Shri PLA, Giri’s known contact, would be able to assist. Thereafter,

Shri CPA sought Shri Giri’s assistance to avail help from Shri PLA to reach

out to certain supplier and that because the supplier wanted to pay

commission abroad, Shri CPA sought the services of Shri PLA. This time

around Shri Giri further stated that, all of them viz., Shri CPA, Shri PLA

and himself, had undertaken these transactions for no consideration or

fee or commission, because Shri CPA had promised future help from

‘concerned people’. When enquired as to who are this ‘concerned people’,

Shri Giri feigned ignorance and answered that Shri CPA did not introduce

them to anyone. The Ld. AR pointed out that, Shri Giri had even refrained

from naming the ‘concerned people’. According to him, if this answer was

true, then it corroborated the assessee’s plea that, Shri Giri had named

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 100 ::

the assessee in his answer to Q No. 19 purely on hearsay. According to

him therefore, these answers were given with the sole intent to simply

exculpate themselves and implicate someone else and thereby confuse

the investigation teams attention from them. We agree with the Ld. AR

that, this entire narrative of Shri Giri sounds not-believable that these

several transactions conducted amongst themselves regularly did not

yield any income for any of them. According to us, such a statement

which is purely self-serving, so as to attribute the entire liability to

another without a substantial, genuine admission of the maker's own

delinquency cannot be believed. Having gone through these different

versions and contradictory answers narrated by Shri Giri in his several

statements and considering their conducts, we are in agreement with the

assessee that, no credence can be attributed to his hearsay, shifty

statements, which makes it unsafe to rely on such an untrustworthy

testimony.

22.04.2016 and that the search action took place on Shri Giri only on

10.05.2016, when he was meeting with Shri CPA in Bangalore. According

to Ld. AR therefore, Shri Giri, being a business associate, must have been

aware of the material unearthed by the Investigating authorities in first

search action and would most likely have been alerted and might have

known that several notings in his names relating to the business

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 101 ::

transactions conducted between Shri CPA, Shri Giri & Shri PLA had been

found in the account book(s) seized from the premises of Shri CPA.

Hence, according to Ld. AR, in order to save their/his skin, from the rigors

of tax, penalty & prosecution consequences, Shri Giri had given this self-

serving statement and attempted to shift the onus onto the assessee

without any tangible evidence other than the hearsay statements.

The Ld. AR further showed us that, the above statement(s) given by 79.

Shri Giri [Q No. 19 of statement dated 10.05.2016 & Q No. 4 of statement

dated 17.05.2016] was in contradiction to the purported version later on

narrated by Shri PLA in his statement dated 28.06.2017 [Q No. 39] and

Shri CPA dated 03.04.2017 [Q No. 4]. Having perused these answers, we

find that not only the narratives regarding the nature of relationship

amongst them was contradictory but later on in their answers, each of

them is noted to have shifted the blame to the other person and had

averred that none of them were actually undertaking these transactions

but were only coordinating for the other and therefore none of them

derived any benefit or income from these transactions. We therefore find

it unsafe to rely on any of their testimonies as they are found to be based

on their respective interestedness and bias.

these bald averments could have been made by Shri Giri to wrongly

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 102 ::

implicate the assessee. The Ld. AR contended that, it could be a case that

Shri CPA had misled Shri Giri into believing that these transactions were

being undertaken by him for someone else to divert any suspicion from

himself. The Ld. AR alternatively contended that, Shri Giri was ordinarily

charging hefty commission for facilitating routing of monies for and on

behalf of Shri CPA and therefore, according to him, Shri CPA could have

possibly named a senior public figure to Shri Giri to make him waive off

the commission on these transactions. The Ld. AR also pointed out that,

as per the admission of Shri Giri [Q No. 16 of statement dated

11.05.2016], Shri CPA and Shri PLA had actually dealt in real estate which

involved delivery of 200 flats for a consideration of Rs.50 crores, but

according to Shri Giri, the deal didn’t ultimately materialize. The Ld. AR

submitted that, possibly the payments by Shri PLA to the finance firms of

Shri CPA could pertain to this real estate deal and that these parties were

acting in connivance to shift the ownership of these unaccounted

transactions from themselves to the assessee. The Ld. AR further showed

us that, Shri CPA was actively involved in education and medical

institutions [including ‘RVS’ Trust, Meenakshi Medical Mission Hospital &

Brilliant Education Trust] and other real estate deals and therefore the

name of the assessee and a fabricated story was concocted to shield

someone else by falsely implicating the assessee. Having already held the

testimony of Shri Giri to be unreliable, though the aforesaid theories

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 103 ::

narrated by the Ld. AR does appear plausible, we find that no useful

purpose would be served by speculating on them.

during the course of search upon Shri CPA & Shri Giri on 10.05.2016,

which has been relied upon by the AO in his satisfaction note, does not

have any probative value in as much as none of them relate to the

assessee. He first took us through the chats/messages extracted from the

mobile phones of these searched persons(s). We find that, though the AO

has laid emphasis on these chats and has averred that they incriminated

the assessee of being in receipt of coal commission, but having carefully

gone through the same, this satisfaction recorded by the AO to be

factually misplaced. It is observed that, several messages were sent to

one party, ‘Sutha CEO 2’, which was possibly Shri Sudarshan. The

contents of these messages are inter alia found to be details of the bank

accounts of the finance firms of Shri CPA [CPA claims to be advisor of

finance-firms]. We are unable to understand as to how these messages

are of any relevance to the case of the assessee before us. It is further

seen that, in the same conversation, it was written that ‘received the cash

and hand over to sister’. The Ld. AR submitted that this message also

does not implicate the assessee in any manner. He pointed out that, it

was an admitted fact that, Shri CPA was regularly withdrawing cash from

the bank accounts of the finance firms and therefore this message stating

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 104 ::

receipt of cash and handing over to his sister does not in any manner

suggest any handing over of cash to the assessee or for that matter Shri

Gobi, but only reinforces that withdrawn cash was handed over to

someone else/sister. Nothing more can be read in to it, unless the sender

of message explains the relevant facts which led to sending of such

message, and supports the same with cogent material. Further, merely on

the basis of such contents of message, the veracity untested, it is unsafe

to rely on such messages, and therefore we can’t draw adverse view

against assessee, basis such messages. Similarly, the message which

read ‘Noted in Laptop Secret’ or the message where the foreign bank

account details of Shri CPA was shared, according to us, doesn’t

incriminate the assessee [third party] in any manner. We are in

agreement with the Ld. AR that, these messages nowhere name the

assessee or in any manner implicates the assessee, or for that matter,

lend any credence to the bald statement of Shri CPA incriminating the

assessee wherein he had stated that, he was withdrawing cash for and on

behalf of the assessee, which was being handed over allegedly to Shri

Gobi. Rather, when considered in the overall surrounding facts, these

messages tends to show that, Shri CPA was actively involved in his own

proprietary business dealings which involved surreptitious activities viz.,

withdrawal of cash and making private notings of the same of being

handed over to someone else/sister.

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 105 ::

Likewise, it is seen that there are messages exchanged between 82.

Shri CPA and Shri Sarvanan, wherein he asks him to call him, to which he

responds calling in five minutes and thereafter, the foreign bank account

details of Shri CPA are shared with Shri Sarvanan. It was pointed out to

us that, Shri Sarvanan is a Singapore resident providing accounting

services through his company M/s Seyon Pro Pte Ltd and is also involved

in trading activities through M/s Atshy Pte Ltd. According to Ld. AR, these

messages thus appear to suggest that, there are some proprietary

dealings of Shri CPA and he has shared his personal bank account details

to enable Shri Sarvanan to make payments to him. The Ld. AR has rightly

showed us that even these chats do not relate to the assessee in any

manner.

The next chats referred to by the AO was between Shri CPA with 83.

one contact, ‘Giri Annalaksmi 2’, who is stated to be Shri Giri. Again, we

find that, Shri CPA would text details of the bank accounts of the finance-

firms to him. The conversation is found to center around informing one,

Mr. Satya who wants money in Chennai and Hyderabad. Apart from the

foregoing, the other texts are generic conversations. These messages

therefore reveal that Shri CPA and Shri Giri were talking to handover

money to one, Mr. Satya. There is no indication in these messages of any

coal commission, any cash payments to Shri Gobi or any reference to the

assessee. It is therefore observed that the statement(s) given by Shri Giri

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 106 ::

and Shri CPA attempting to incriminate the assessee were bald and not

backed by any tangible evidence. Thus, the AO’s reliance on the chat

messages found from the mobile phones is noted to be factually wrong,

having no linkage with the assessee.

mobile phones was seized from the possession of Shri CPA at the time of

his second search action on 10.05.2016, the Investigating Officer had

again recorded his statement u/s 132(4) of the Act. He pointed out that,

apart from confirming the fact that the mobile phones were seized from

his possession, no questions were put to him regarding the electronic data

contained in the mobile phone. He took us through the entire statement

and submitted that none of the questions and answers in this statement

indicated that the material seized from the possession of Shri CPA had

any remote connection with the assessee. The Ld. AR reminded us, that

Shri CPA in his statement dated 10.05.2016 had categorically stated that,

he was doing real estate transactions and other commission business with

Shri Giri. According to him therefore, the ordinary presumption was that

the conversations and chats between Shri CPA, Shri Giri, Shri Sarvanan

and Shri Sudarshan was regarding their proprietary real estate

transactions and commission business. The aforesaid statement recorded

at the time of search, coupled with the fact that even the electronic data

contained in mobile phone did not in any manner relate to the assessee,

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 107 ::

justifies the Ld. AR’s contention that the averments made by the AO

linking these statement(s) and electronic data with the assessee, in his

satisfaction note, was factually unsustainable.

invoices etc., found from the electronic devices of Shri CPA & Shri Giri is

concerned, the Ld. AR has challenged the veracity of these digital

evidence and contented that they were not authentic/genuine. He pointed

out that, Shri CPA had been searched twice, first on 22.04.2016 and then

along with Shri Giri on, 10.05.2016. Taking us through the panchanama

of Shri CPA dated 22.04.2016, the Ld. AR showed us that, his electronic

devices were seized back then as well, but no such emails, agreements or

invoices, etc. were found on his electronic devices or his emails. The Ld.

AR therefore expressed his dismay as to how these digital evidences

which are pre dated 22.04.2016, viz. they pertained to FY 2015-16, was

suddenly found in the electronic devices of Shri CPA and also Shri Giri,

when none of them were unearthed in the first search dated 22.04.2016.

The Ld. AR thus cast his skepticism on the conduct of these searched

persons and alleged that, these digital evidences without certificate of

authenticity are unsafe to even being considered as material in this case,

since it were fake, and fabricated to save some ones skin. The Ld. AR also

asserted that, even otherwise, these digital evidences neither,

belong/relate/pertain to assessee nor have any bearing on the total

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 108 ::

income of the assessee and therefore according to him, they couldn’t

have been relied as material/evidence by the AO for assumption of

jurisdiction u/s 153C of the Act; and by relying on such digital evidences,

the AO erred in usurpation of jurisdiction u/s 153C of the Act, which

action vitiates the issuance of notice u/s 153C of the Act.

AO, [AO is the same for Shri Giri and the assessee] and showed that,

even otherwise, the contents of these seized material did not contain any

information or values, which could be said to ‘have any bearing on the

total income of the assessee’ for any of the AYs 2014-15 to 2017-18.

When this aspect was pointed out, according to Revenue, these seized

materials were meant to aid the content(s) of the account book(s) seized

from the premises of Shri CPA. We find that, the provisions of Section

153C empowers the AO to assume jurisdiction over a third person

[assessee, in this case] if the material seized from the premises of the

searched person [Shri Giri, in this case] related to the third person

[assessee, in this case] and had a bearing on his total income. Hence, the

condition precedent to assume jurisdiction is two-fold viz., (a) the

material relates to the third person [assessee, in this case] and (b) the

contents or information in this material has a bearing on the total income

of the third person [assessee, in this case]. We agree with the Ld. AR that

the conditions were evidently not met, in the given facts before us.

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 109 ::

Secondly, the Ld. AR showed us that, the impugned seized material 87.

comprised of email correspondences, agreements, invoices etc. which

only pertained to AY 2016-17. However, the AO is found to have referred

to these seized material in the satisfaction notes recorded for all AYs

2014-15 to 2017-18, which prima facie is unjustified, and thereby

exposes the non-application of mind. It was also brought to our notice

that, the AO [while recording his first satisfaction in the matters of Shri

Giri] had recorded his satisfaction that these seized material ID marked

ANN/A/GC & ANN/MKM/CG/ED/S ‘belonged to’ the assessee. Having

perused the contents of these emails, invoices, agreements etc., we agree

with the Ld. AR per-se they neither ‘belonged to’ or ‘related to’ the

assessee. It is observed that, these emails, invoices & agreements relate

to the foreign companies, M/s Spring Traders Ltd Hong Kong, M/s Seyon

Pro Pte Ltd Singapore, M/s Petramex Chemicals Ltd Singapore and several

other foreign entities based out of UAE. From the details available on

record, it is observed that, these companies were managed and controlled

by Shri Sarvanan [friend of Shri Giri / Shri CPA], Shri Pankaj Baid

[associate of Shri PLA] etc. The fact however remains that none of these

entities had any connection with the assessee or any of the coal suppliers

to the TNEB. We observe that, the Revenue had also made enquiries

through FT&TR from these countries and the Ld. CIT, DR [even after us

giving time to produce any material as on date of hearing in October

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 110 ::

2025] was unable to show us any adverse material or information

gathered from these enquiries which would implicate the assessee or any

of the alleged coal suppliers mentioned by these persons in their sworn

statement(s). We are therefore unable to comprehend as to how the AO

arrived at the satisfaction that these seized material ‘belonged to’ to the

assessee. Rather, we find that there was no linkage or connection with

the assessee whatsoever. At the cost of repetition, it is to be kept in mind

that the presumption u/s 132(4A) and 292C of the Act is qua the

searched person and it is presumed that the contents of the material as

seized, is true. The contents of the seized material, ordinarily presumed

to be true (unless rebutted), prima facie indicates that, certain foreign

companies were receiving commission for assisting foreign coal traders

for procuring coal to be supplied by them. The agreements suggest that

they pertain to the business support and marketing assistance to be

provided by them and the invoices also spelt out the nature & purpose of

remittances. Further, the email correspondences did not contain anything

incriminating, rather it majorly contained attachments of these invoices

and agreements. According to us, this electronic data at their face value

only suggested that commission was paid by certain foreign coal traders

to foreign agents. On stand-alone basis, we find that this seized content

has no link or relation with the assessee.

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 111 ::

The Ld. AR further pointed out to us that, the above electronic data, 88.

particularly the agreements and invoices revealed serious infirmities

exposing their lack of credibility. He brought to our notice that most of

these invoices and agreements are unsigned or partly signed and bank

remittance advices of only few are available. He further showed us that,

several invoices didn’t contain any address or had phone number with ISD

code of different country or contained wrong addresses etc. According to

him therefore, these email correspondences contained fake documents

which existed only on paper. Taking us through the contents of the

agreements, he showed that these lacked basic details and therefore were

not genuine. According to him therefore, the purported coal commission

which is found to be a common template in these correspondences was

nothing but a facade created by Shri CPA and his associates to cover up

their hawala transactions and that there is no substance in their

testimonies. In support, he invited our attention to the statement of Mr.

Sarvanan of Singapore who was the sole founder and director of the two

entities namely Seyon Pro Pte Ltd and Atshy Pte Ltd wherein he had

categorically stated that all these agreements and invoices were fake and

the underlying transactions didn’t take place. The Ld. AR thus submitted

that the AO’s reliance on these fake and bogus material was factually

misplaced and unjustified.

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 112 ::

The Ld. AR further brought to our notice that, if these agreements 89.

and invoices are put together, then the alleged commission transacted

was USD 87,20,000 whose Rupee equivalent works out to Rs.56.68

crores. He pointed out that the alleged commission which was added in

the hands of the assessee was Rs.546 crores, which nowhere correlated

with this electronic data. He reiterated that, if the narrations of the

agreements are taken at their face value, then it was meant for assisting

and sourcing of coal by the coal suppliers and not for selling them.

Therefore viewed from any angle, these electronic data did not suggest

any receipt of commission by the assessee and it did not have evidentiary

value, in the present case.

these transactions related to coal commission facilitated for and on behalf

of the assessee, but there was no such admission originally made by Shri

CPA who was also subjected to search. As noted above, Shri Giri had

named the assessee only on hearsay, because Shri CPA had allegedly told

him that these transactions were on account of the assessee. According to

Ld. AR therefore, it could also be a case that, Shri CPA had misled Shri

Giri into believing that these transactions were for someone else, whereas

it actually related to him, to avoid giving him hefty commission. The Ld.

AR reminded us that, even in the subsequent statement(s) given by Shri

CPA dated 17.06.2016, 02.07.2016 & 28.12.2016, at no point of time, did

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 113 ::

he ever name the assessee or state that the monies being facilitated

through Shri Giri & Shri PLA into the finance-firms were for and on behalf

of the assessee. Instead, as noted earlier, Shri CPA had stated that, they

were relating to his own business transactions. We have also observed

earlier that substantial unaccounted cash and unaccounted investments

were also found from the possession and in the name of Shri CPA and his

family members, whereas nothing was found from the assessee. These

material contemporaneous facts further supports the assessee’s case

that, the statement given by Shri Giri guessing that Shri CPA was

receiving monies at the instance of the assessee was hearsay, cooked-up

story.

premises of Shri CPA & Shri Giri nor their sworn statement(s) were able

to establish any link with the assessee. It is also seen inter alia that, Shri

CPA in his statement dated 03.04.2017 [since retracted as on date of

satisfaction on 03.12.2025] had alleged that, he was having link only with

Shri Gobi, through whom, he was dealing on behalf of the assessee. We

however find that, Shri Gobi had clearly denied the same. The Ld. AR

brought to our notice that even Shri Gobi had been subjected to search

u/s 132 of the Act as early as on 10.05.2016, (along with Shri Giri & Shri

CPA) and no incriminating material or document was found from his

premises, which would even remotely suggest that he was acting as a link

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 114 ::

between the assessee and Shri CPA. The Ld. AR pointed out that, even

the electronic devices seized from the possession of Shri Gobi and Shri

CPA didn’t reveal any such conversation or correspondence, which would

suggest that they were facilitating any alleged coal commission

transactions. It is not in dispute that, Shri CPA and Shri Gobi were

friends. Also, Shri CPA and Shri Gobi being members of the same political

party had dealt for some non-business-related work(s) such as

transfer(s), promotion(s), etc and in a small business transaction of less

than Rs. 5.50 Lakhs. The Ld. AR has rightly pointed out that, apart from

the foregoing link, there was no indication in any seized material that,

Shri CPA and Shri Gobi were involved in any transactions, for and on

behalf of the assessee. Hence, in absence of any proof of linkage with the

assessee, these statement(s) in our view were indeed unreliable and

cannot be said to relate to the assessee.

the assessee essentially through two pieces of evidence found in the

electronic data, viz., (i) One e-mail which was forwarded to mail ID -

mails.epe@gmail.com found from the electronic device of Shri CPA which

contained salutation ‘Hi Gopi’, and (ii) One letter addressed by the

assessee to a temple requesting arrangements for visit of certain persons

which inter alia included Shri CPA. Having perused the contents of these

seized material, we are unable to fathom as to how such communication

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 115 ::

could be used to draw connection of a wrong doing of such magnitude

against a public figure like assessee; and if we validate such a flimsy

connection on these communication, as then we would have to adopt a

criterion of relevance so expansive which would lose all practical utility.

statement of Shri Gobinath recorded at the time of search, wherein he

had enlisted his three (3) email IDs. It is seen that, the email ID

mails.epe@gmail.com does not feature therein. The Ld. CIT, DR was

unable to show that, this statement given by Shri Gobinath had been

disproved by the Revenue at any point of time. Hence, according to us,

the purported email sent with salutation ‘Hi Gopi’ to an email ID, cannot

be treated as a proof of linkage to justify such large scale monetary

transaction between Shri CPA and Shri Gobinath on behalf of the

assessee, without credible material.

is concerned, we agree with the Ld. AR that these types of requests are a

common occurrence in the daily routine of public functionaries and only

because the assessee had recommended arrangements for temple visit of

several persons which inter alia included Shri CPA is of no consequence to

allege any business link between them. The Ld. AR explained to us that,

admittedly, Shri CPA and Shri Gobinath were friends and that the latter

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 116 ::

was a distant relative of the assessee and therefore it was indeed likely

that Shri Gobinath would have arranged Shri CPA’s temple visit through

the assessee. According to us, this particular seized material is also not

decisive enough to accuse the assessee of having any business link with

Shri CPA involving huge magnitude of transactions through the latter.

Rather, according to us, the fact that, the Revenue had to rely on such

recommendation letters for temple visits to justify linkage with the

assessee, shows that, the invasive search actions conducted upon Shri

CPA, Shri Gobinath and the assessee actually did not yield any useful link

amongst them basis which any prudent person could allege that the

account book(s) maintained by Shri CPA contained notings relating to the

assessee.

Overall therefore, we are therefore in agreement with the Ld. AR 95.

that, the assessee’s name taken by Shri Giri in his answers was based on

tittle-tattle and smear-work sans any evidence. We find in particular that,

Shri Giri was unable to provide any material whatsoever giving any proof

of linkage with the assessee or the coal suppliers. As noted above, the

electronic data seized from him was dumb in nature and did not have any

relation with the assessee. There is also no evidence found in his

statement(s) which would suggest that the foreign companies in which

amount(s) were received abroad had any link to any of the coal suppliers.

Also, nothing cogent was brought on record in relation to the trail of

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 117 ::

monies received by the finance firms of Shri CPA. Shri Giri was also not

able to show any identifiable source of any coal supplier wherefrom the

monies were coming. According to us therefore, such bald/hearsay

statement of Shri Giri, in absence of any credible, corroborative evidence,

cannot be said to relate to the assessee and have any bearing on his total

income.

We now turn our attention to the statement of Shri PLA which was 96.

recorded across four days from 28.06.2016 to 01.07.2016. It is seen that,

Shri PLA was searched almost two (2) months after search took place on

Shri CPA and thereafter Shri Giri. The Revenue has not brought on record

any incriminating material found in relation to the impugned issue, in the

course of his search. The satisfaction recorded by the AO of the assessee

only refers to his sworn statement recorded at the time of search, copy of

which is found placed at Pages 48 to 86 of Paper Book Vol - VI. It is

noted that, on the first day of recording of his statement i.e. 28.06.2016,

thirty eight (38) questions were put to him wherein he had explained his

business interests, sources of income, activities in M/s Peerless

Consultancy in which he was a director, details of personal expenses at

his daughter’s wedding etc. We find that, none of these questions and

answers given by Shri PLA had any relation or connection with the

assessee and he had not suggested that he was involved in facilitating

any commission for the assessee.

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 118 ::

The Ld. AR then showed us that, the recording of statement of Shri 97.

PLA resumed only on 29.06.2016 at 8PM and this time Shri PLA was

asked about his connection with Shri CPA. In his answer, Shri PLA

explained that, he had met him 4-5 years ago and that Shri CPA had

introduced him to the assessee, with whom he discussed about some

solar projects in the State, which did not materialize. The Ld. AR pointed

out that, this averment was vague & bald and that Shri PLA had not

provided any proof evidencing that he actually met the assessee. In the

same answer, Shri PLA is found to have further stated that, subsequently,

Shri CPA had approached him and informed him that, he will through

Maheshwari Coal Company arrange to remit some monies abroad, which

Shri PLA is required to ensure that it is given to his CA, Shri Sarvanan in

Singapore and for these services, Shri PLA had charged 1% commission.

According to him, Shri CPA was presumably getting commission from this

company for coal supply contract to Government. However, when he was

asked to provide any details or documents or evidence to justify this

assertion, Shri PLA expressed his inability to provide anything. The Ld. AR

again pointed out to us that, such statement sans any evidence cannot be

entertained. He further brought to our notice that, this connection with

Shri CPA, as explained by Shri PLA, was contrary to all the versions

narrated by Shri Giri in his several statement(s). This according to the Ld.

AR showed that, all these witnesses, whose statements the AO was

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 119 ::

seeking to rely upon in his satisfaction note, were evidently making false

assertions and that none of their theories were tallying nor were they

backed by any material or evidence, making it unsafe to rely on any of

their testimonies.

statement of Shri Giri, wherein Shri Giri had stated that, Shri PLA was

giving assistance to Shri CPA to obtain commission from A Co., Shri PLA

had outrightly denied the same, which casts further doubt on the

testimony of Shri Giri. Instead, Shri PLA is found to have submitted that,

he had only advanced loan(s) to Shri Giri and that he didn’t have any

financial transaction with Shri CPA. We observe that, in none of these

answers had Shri PLA named the assessee at anytime or suggested that

he was arranging routing of coal commission for and on behalf of the

assessee. Instead, it appears that, though he had admitted to have

facilitated receipt of commission from some other entity [not A Co.] to

Shri CPA, but later on denied having any financial transaction with Shri

CPA. According to us, these answers are also found to be riddled with

infirmities and interestedness and hence cannot be taken at their face

value.

Spring Traders Ltd and M/s Petramex Chemical Pte Ltd, which according

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 120 ::

to him, were used to transfer commission and he had stated that, one of

these companies were controlled by one ‘Pankaj’, which he later identified

as Shri Pankaj Baid. The Ld. AR has rightly contended that, apart from

giving this name, no specifics were provided by Shri PLA to identify this

person or his relation with Shri PLA or with Shri CPA or with any of the

alleged coal suppliers. We are unable to understand as to how these

answers given by Shri PLA in his sworn statement(s) are sought to be

used by the Revenue against the assessee. What transpires from the

statement of Shri PLA is that, he was a hawala operator whose role was

to get the monies from bank accounts of offshore companies of money

changers to India and he was inter alia providing these services to Shri

CPA as well. It appears that Shri PLA was assisting Shri CPA in routing his

monies being received abroad by the concerns controlled by his Chartered

Accountant of Singapore into India. However, there is no whisper of the

source of monies and wherefrom was this monies being received by Shri

Pankaj Baid. It is also not clear as to where were these monies applied to,

paid by the Singapore concerns of Shri CPA. There is also no enquiry

made by the Revenue as to how was this monies coming into India. In

absence of any details regarding the source of monies, its trail and

ultimate application, according to us, the ordinary presumption would be

against Shri CPA and Shri PLA and that these transactions were on their

own proprietary account. It is seen that, though Shri Giri had affirmed

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 121 ::

this narrative by stating that, the monies received abroad by Shri PLA was

being brought back into India, and it was being paid by the entities

controlled by Shri PLA to the entities of Shri CPA, but we find that, Shri

PLA had clearly denied any such transactions and the Investigating Officer

did precious little to investigate any further and marshal the actual facts.

Though the contemporaneous facts does show that the finance firms

controlled/advised by Shri CPA had received monies to the tune of Rs.205

crores, but the origins of these monies has not been traced by the

Revenue. Nothing has been brought before us which shows that, these

monies originated abroad or from the coffers of any coal suppliers to

State of Tamilnadu. Overall therefore, we find that, though Shri PLA had

admitted to providing money changing services abroad to Shri CPA, but

there is nothing cogent shown by him which could lead one to believe that

the monies being transacted abroad for Shri CPA, pertained to the

assessee. According to us, the inference drawn by the AO in his

satisfaction note by relying on the statement of Shri PLA, was also far-

fetched having no rational basis whatsoever.

assessee is hearsay, and without reliable material to establish it, adverse

view against assessee is untenable. Looking from any angle, such a

statement incriminating the assessee could have been said to be valid and

be used for the purposes of any regular assessment, only if it was

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 122 ::

supported by corroborative material, which as held above, was absent in

the present case. The Ld. AR had cited before us several judgments

wherein it has been consistently held that, the statements recorded u/s

132(4) of the Act do not by themselves constitute incriminating material

found in the course of search for the AO to assume jurisdiction to disturb

unabated assessments of the assessee, unless they are backed by some

corroborative evidence. Some of the relevant decisions taken note of by

us are as follows:-

(i) CIT v. Harjeev Aggarwal (290 CTR 263) (Del HC)

“19. In view of the settled legal position, the first and foremost issue to be addressed is whether a statement recorded under Section 132 (4) of the Act would by itself be sufficient to assess the income, as disclosed by the Assessee in its statement, under the Provisions of Chapter XIV-B of the Act.

(ii) PCIT v. Best Infrastructure (India) Pvt. Ltd. (ITA No. 13 of

2017) (Del HC)

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 123 ::

“38. Fifthly, statements recorded under Section 132 (4) of the Act of the Act do not by themselves constitute incriminating material as has been explained by this Court in Harjeev Aggarwal (supra). Lastly, as already pointed out hereinbefore, the facts in the present case are different from the facts in Smt. Dayawanti Gupta (supra) where the admission by the Assessees themselves on critical aspects, of failure to maintain accounts and admission that the seized documents reflected transactions of unaccounted sales and purchases, is non-existent in the present case. In the said case, there was a factual finding to the effect that the Assessees were habitual offenders, indulging in clandestine operations whereas there is nothing in the present case, whatsoever, to suggest that any statement made by Mr. Anu Aggarwal or Mr. Harjeet Singh contained any such admission.”

(iii) PCIT v. Anand Kumar Jain (HUF) (ITA No. 23 of 2021) (Del

HC)

“7. The preliminary question under consideration before us is whether a statement under Section 132(4) constitutes incriminating material for carrying out assessment under S. 153(A) of the Act. A reading of the impugned order reveals that the statement of Mr. Jindal recorded under Section 132(4) forms the foundation of the assessment carried out under Section 153A of the Act. That statement alone cannot justify the additions made by the AO. Even if we accept the argument of the Revenue that the failure to cross-examine the witness did not prejudice the assessee, yet, we discern from the record that apart from the statement of Mr. Jindal, Revenue has failed to produce any corroborative material to justify the additions. On the contrary we also note that during the course of the search, in the statement made by the assessee, he denied having known Mr. Jindal. Since there was insufficient material to support the additions, the ITAT deleted the same. This finding of fact, based on evidence calls for no interference, as we cannot re-appreciate evidence while exercising jurisdiction under section 260A of the Act.”

(iv) Saveetha Institute of Medical & Technical Sciences v. ACIT

(25 taxmann.com 138) (ITAT Chennai)

“8. The Assessing Officer has opined that the capitation fees so collected cannot tantamount to voluntary contribution or subscriptions to the corpus of the society but are in the nature of donations and capitation fees. However, this addition has been deleted by the learned Commissioner of Income-tax (Appeals) by observing that no such

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 124 ::

addition can be made solely on the basis of statements recorded under section 132(4) of the Act and there being no related evidence having been found during search showing receipt of such donations. He has also found that no one has really accepted having received donation/capitation fees as has been alleged by the Assessing Officer.

9….. There being no incriminating evidence regarding receipt of capitation fees, particularly when no document was put to Dr. B. Muthukumaran regarding charging of capitation fees, such a statement cannot be made a basis for making such a huge addition. His statement was rather denied by the managing trustee/president. Shri T.A. Varadarajan, finance manager also denied the statement of Dr. B. Muthukumaran. In any other case, even one goes by this statement, this would not make any meaningful sense. Dr. B. Muthukumaran has stated that the money had been handed over to one Shri Saravanan, accounts officer, but Shri Saravanan was never enquired by the Department. The statement of Dr. N.M. Veeraiyan, who is the president/ management trustee of the trust, never accepted having receipt of capitation fees or donation and he had rejected and denied the statement of Dr. B. Muthukumaran. Statement of Dr. N.M. Veeraiyan was recorded under section 131 on November 9, 2007, in which he has stated that whatever was received from the students was reflected in the books of account. This statement confirms the contention of the assessee that some well wishers were giving donations which were duly received and reflected in the books of account. In fact, the statement of Dr. N.M. Veeraiyan was recorded under section 131 on November 9, 2007 which has also been made a basis for this addition. He was not examined under section 132(4) of the Act. A statement made under section 131 cannot be equated with a statement recorded under section 132(4) of the Act. A statement recorded under section 132(4) is a valid and relevant piece of evidence but a statement recorded under section 131 is not so relevant. Nevertheless, even a statement recorded under section 132(4) cannot be made a sole basis for any such addition unless corroborated by seized material. If any admission is made in a statement recorded under section 132(4), this can be used with reference to any piece of evidence found during the course of search. In this case, as we have stated above, no such piece of evidence or to say any incriminating evidence was either found or seized. What was found was a note giving the break-up of number of students who were admitted under different quotas in various courses. In our well considered view, this addition could not have been made at all in the hands of the assessee-trust on the basis of such evidence. Recording of some questions after verification could be viewed as an involuntary statement, extracted from the deponent. In any case, a possibility of such inference is always there. With regard to such statement, the Central Board of Direct Taxes has issued instructions vide Circular No.

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 125 ::

286/2/2003-IT, wherein it has been directed that search party shall not obtain confessions. So, the admission made under section 132(4) by the concerned officer cannot be treated even as a valid piece of evidence. There being no incriminating document having been found or seized during search and the statement also being abstruse, the addition in question has no legs to stand on. Had there been a valid statement, even then, solely on the basis thereof, addition could not have been made. This is a well settled principle of law by now and there are umpteen decisions in support of this view.”

(v) DCIT v. VVD & Sons (P) Ltd. (158 taxmann.com 395) (ITAT

Chennai)

“8.5 The addition made by the Assessing Officer was merely on the basis of statement and is not corroborated by any documentary evidence. It is not denying the fact that statement was on oath and can be used as evidence. However, mere statement cannot be the basis of addition. Without credible evidence, the Department cannot make addition purely based on the confessions made during search/survey operation as envisaged by the CBDT vide instruction F.N. 286/2/2003 dated 10-3- 2003 and reiterated by the Board vide its letter dated 18-12-2014.”

decisions (supra), we find that the case of the assessee stands on a

better footing. The assessee is not the ‘searched person’ but is the ‘other

person’ in the facts before us. In the above judgments, it has been held

that the statement recorded u/s 132(4) of the Act cannot be solely relied

upon to justify an addition in the hands of the ‘searched person’, nor can

be treated as an incriminating material found in the course of search,

then as a corollary, such a statement of a ‘searched person’ cannot have

been used as an incriminating material qua ‘other person’, who is a third

party, unless corroborated by cogent, relevant materials. In the given

facts before us, the assessee has been able to establish that not only the

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 126 ::

statement of Shri PLA was hearsay, it is also untrustworthy and is noted

to be but not backed by any independent evidence, and therefore we are

of the considered view that, the AO’s reliance on the same to justify

usurpation of jurisdiction u/s 153C of the Act was fallacious since

fundamentally flawed.

Paras 2 to 4, was based only on suspicion alone, sans any relevant

material. The AO is found to have simply relied on bald and untrustworthy

testimonies of Shri CPA, and hear-say statements of Shri Giri & Shri PLA

to allege that, the notings found in the account book(s) of Shri CPA

belonged/pertained to the assessee, and contained information regarding

alleged coal commission collected by him, no link with coal-suppliers has

been established. As observed above, none of the material seized from

the premises of Shri CPA and Shri Giri contained any information which

could incriminate the assessee in manner. In fact there is nothing

contained in these materials which related to the assessee. We thus are

unable to countenance the satisfaction recorded by the AO as on

03.12.2018 u/s 153C of the Act, as it was a pure guess work and not

based on any cogent, tangible material.

action had laid bare the unaccounted hawala transactions of Shri CPA,

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 127 ::

Shri Giri & Shri PLA, and all these persons had vindictively acted to

implicate the assessee, in order to save themselves or someone else. The

Ld. AR pointed out that, all these persons i.e. Shri CPA, Shri Giri & Shri

PLA in their sworn statement(s) were simply mumbling names of senior

public functionaries and reputed businessmen, without any proof of

linkage or evidence, with the sole intent to sensationalize the issue(s) and

shift the limelight from them onto these people. Having considered the

gamut of facts, [as on the date of recording of satisfaction i.e. on

03.12.2018], sans relevant material, which cannot be basis to justify

assumption of jurisdiction u/s 153C of the Act.

before us, according to us, the burden of proof was on the searched

person(s) to show that the transaction recorded in their account books

and the monies received by them related to another person. In the

present case, we find [other than the interested/hear-say evidence] that

there was no valid material/evidence adduced by any of the searched

persons [Shri CPA or Shri Giri or Shri PLA] which could be considered

believable enough to shift the burden, which burden initially rested on

them of establishing that the monies which came into their hands was

being received on behalf of the assessee. Rather, the seized material, as

discussed in the foregoing, are found to be either of no relevance or

relation, or contradictory, or fake and untrustworthy. Hence, the

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 128 ::

sweeping and evasive statements suggesting that, the monies were being

transacted at the directions of the assessee are found to be without any

basis or material or details and instead it is found based on

inconsistent/retracted statement of Shri CPA or hear-say of Shri Giri &

Shri PLA and therefore, such fleeting testimonies does not inspire any

confidence, to justify the AO’s assumption of jurisdiction u/s 153C of the

Act in the matters of the assessee.

question as to whether the AO of the assessee had in his possession any

material or document which related to the assessee and had a bearing on

his total income, is noted to be a question of fact, and for this, we have to

weigh the probabilities in light of the relevant indicia. In our considered

view, the following parameters would guide us to adjudicate the legal

challenge before us.

(i) What was the source of monies which came to Shri CPA

[searched person]

(ii) What was the nature of transaction amongst Shri CPA, Shri

Giri and Shri PLA and the motive for routing the monies?

(iii) What is the position and relationship of the searched persons

with the assessee

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 129 ::

(iv) Whether the amounts in question was shown to be received

by the assessee

far the most important test for ascertaining the veracity of the

statement(s) given by the searched persons that the monies which came

into their hands, in reality was for the benefit of another person [assessee

in this case]. The burden of proof for showing that the monies received by

the entities of Shri CPA and the transactions having found recorded in his

books, actually belonged to another person [the assessee] lies on the

searched person who asserts that it is such a transaction. The statement

of searched party, as in this case implicating a third party (assessee in

this case) is an adverse information (which may be exclusively in the

knowledge of that person), may trigger ‘reason to suspect’; then, the AO

to make reasonable enquiry and collect material to form a satisfaction

that books of accounts seized from Shri CPA pertains or the information

contained therein relates to assessee and that the books seized have a

bearing on the determination of total income of third party [i.e. assessee]

Existence of cogent and demonstrative material is germane to AO’s

satisfaction in concluding (i) that material belongs/pertains/relates to

‘other-person’ (ii) and that such material have a bearing on the

determination of total income of ‘other-person’ for valid initiation of

action u/s 153C of the Act against ‘other-person’/third party (assessee in

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 130 ::

this case). At this juncture, it is necessary to remind ourselves that, the

entries in the regular books though relevant, are not sufficient to charge

any third party with liability. In other words, such books even if authentic

can’t fix the liability upon the person in the absence of independent

evidence of trustworthiness [refer CBI v V.C. Shukla 1998 Cr.LJ 1905

(SC)]. It should be borne in mind that ‘satisfaction’ of the AO as to the

existence of jurisdictional fact against the assessee as envisaged

u/s.153C, should be that of a prudent person. The AO before recording

the ‘satisfaction’ to usurp jurisdiction u/s.153C of the Act against the third

party (assessee in this case) should consider the matters before him,

either believe to the existence of jurisdictional fact or considers its

existence so probable that a prudent man ought under the circumstances

of the case, to act upon the supposition that it exists. Having stated so, it

has to be also remembered that statutory presumption of fact against

searched person i.e., Shri CPA (from whom the books were discovered)

doesn’t shift, unless, he dislodges the presumption of fact against him.

Therefore, Shri CPA is bound to prove the source wherefrom the money

came into his hands, and show by adducing some reliable material to

prove that in reality the money was for the benefit of another person

[assessee in this case], or else, the burden to prove remains on his

shoulder i.e, on Shri CPA, the searched-person [Refer Section 132 (4A) &

292C of the Act]. And in such an event, it (burden of proof) cannot be

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 131 ::

said to have shifted to someone else/assessee. In other words, as

discussed, statement alleging culpability on another person (like in this

case the assessee), may raise a suspicion, which would trigger an

investigation by the AO, who should investigate and see whether there is

any truth in it; and if there is any relevant material/evidence unraveled in

the investigation, (i.e. any nexus found out of passing of monies from the

supplier to assessee) then the AO should collect such material/evidence

against the third party (in this case the assessee), and then he should

weigh the evidence before him and see whether the searched person has

been able to discharge the statutory burden which is cast upon him; if the

AO is satisfied that searched person has been able to dislodge the burden,

then in that event only he will be justified in proceeding against the third

party/other-person as envisaged under section 153C of the Act. That is,

basis Shri CPA’s testimony against assessee, if the AO finds reliable

material supporting the fact that the money in question was for the

benefit of assessee, and able to credibly link the assessee with alleged

commission payment from any coal-suppliers, it can be said that Shri CPA

has been able to discharge the burden of proof, and then the ‘onus shifts’

to the shoulder of assessee, who can be called upon to meet the

material/evidence found against him. Thus, the AO is duty bound to

satisfy himself about the existence of the essential jurisdictional facts

against third-party/other-person assessee before successfully usurping

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 132 ::

jurisdiction under section 153C of the Act. As noted, if the AO finds

reliable material supporting the allegation made by Shri CPA against

assessee, and able to credibly link the assessee with alleged commission

payment from any coal-suppliers, then with the support of such material

in his possession, he should draw his satisfaction-note explaining how the

information contained in the seized books relates to assessee, which in-

turn has a bearing on the determination of total income of assessee, then

the AO may be justified in proceedings against the third-party/assessee.

However, if the AO fails to collect relevant material/evidence against the

third party, then the burden of proof against the searched party doesn’t

shift and it will continue to be on him till he discharges. In such a

scenario, the AO won’t be justified in proceedings against the third party

by simply roping him by filling up the ‘Form for satisfaction u/s.153C of

the Act’ and asking him to prove the negative, which action of AO will be

unjustified/arbitrary, which cannot stand the scrutiny of law. That is why

safe-guards/condition-precedents are stipulated before AO assumes

jurisdiction u/s 153C of the Act against third-party/other-person. And

satisfactions of such condition-precedents are sine qua non for valid

assumption of jurisdiction against third-party/other-person. The Rule of

Evidence is that burden of proof to prove any particular fact which is in

the exclusive knowledge of a person lies on that person. Hence in the

case in hand, the burden is on the searched person (Shri CPA) from whom

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 133 ::

materials/books have been unearthed, and it should be kept in mind that

such burden doesn’t shift even if he accuses any other third party for

whom he states to be maintaining the books or holds ownership of asset;

and if he wants the AO to believe in existence of such fact then he has to

prove it.

searched person has not been able to dislodge the statutory presumption

of fact against him and likewise, the AO has also failed to satisfy the

requirement of law for invoking the provisions of Section 153C of the Act

against the assessee. To put it simply, the case of the Revenue is that the

impugned notings found in the account books and the corresponding

monies found credited in the bank accounts of the firms advised and

controlled by Shri CPA, in reality, related to the monies received by the

assessee from the alleged suppliers. We however find that, precious little

has been done by the Revenue to justify such an assertion. As already

noted earlier, there is also no material at the stage of recording

satisfaction indicating that any monies were actually delivered to the

assessee or Shri Gobi by Shri CPA. In so far as the source of such monies

is concerned, it is observed that, neither the Investigating Authorities nor

the AO attempted to make any enquiries from the suppliers who allegedly

paid the impugned commission to the assessee. Neither any link

established to show any flow of money from the coal-suppliers to bank-

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 134 ::

accounts of Firms of Shri CPA. Hence, we find that there is no material to

show us that any of the suppliers, who allegedly paid commission, had

admitted to the same or averred that they had paid any monies to the

companies controlled by Shri CPA or Shri PLA. Hence, it is seen that, the

source of monies coming to Shri CPA in his finance firms has also not

been established to actually relate to the assessee qua alleged quid pro

quo with the coal suppliers. In that view of the matter, according to us,

the foundation of impugned satisfaction fails because the searched person

[Shri CPA] has been unable to discharge the burden of proof lay upon him

to rebut the statutory presumption of fact against him. Further, as noted

earlier, the Revenue had made independent enquiries through FT&TR

from the respective States where the foreign companies like M/s

Petromax Chemical Pvt Ltd, M/s Atshy Pvt Ltd, M/s Seyon Pro Pvt Ltd, M/s

RJB General Trading LLC, M/s Shakti Sona Trade Corporation Ltd, M/s

Global Equipment Trading Pvt Ltd, M/s Springs Traders Ltd was domiciled

and it is seen that, nothing adverse has been brought on record to show

that these foreign companies were in receipt of any monies from any of

the alleged coal suppliers or that they were related to any of the alleged

coal suppliers in any manner. It was brought to our notice that, these

companies except M/s Springs Traders Ltd, was controlled by the

associate(s) of either Shri PLA or Shri CPA and therefore, evidently, the

monies transacted through these companies did not have any relation

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 135 ::

with any of the alleged coal suppliers. The Ld. DR for the Revenue

however pointed out the flow chart prepared by the AO at Page 69 of the

assessment order, according to which, one coal supplier [K Co.] had

procured coal from M/s Spring Traders Limited, which in turn paid coal

commission to the foreign entities of Shri PLA / CPA. According to the Ld

CIT DR, as per the AO, M/s Spring Traders Limited was a group concern

of K Co. Thus, the Ld. DR claimed that the ‘link’ had been demonstrated

by the AO, which evidenced payment of commission. Countering the

same, the Ld. AR showed us that this flow chart was not prepared on the

basis of any tangible material or corroborative evidence. Rather, the flow

chart was prepared on the basis of the hearsay statement of Shri PLA.

The Ld. AR emphasized that the allegation that M/s Spring Traders

Limited related to K Co. group was not backed by any evidence, but was

emanating from the hearsay statement of Shri PLA. The Ld. AR claimed

that M/s Spring Traders Limited had no connection or relation with K Co.

group and to support his averment, he placed before us the credentials of

the company as available in the public domain to demonstrate the same.

In order to verify this assertion of the assessee, the Bench had required

the Ld. DR, to adduce some material basis which the AO observed that

M/s Spring Traders Limited was group concern of the K Co. group. Though

sufficient time was given, the Ld. DR was unable to furnish any evidence

or material in this regard. The Revenue was also unable to show us that,

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 136 ::

the FTTR enquiry conducted by them suggested that M/s Spring Traders

Limited was part of K Co Group or that M/s Spring Traders Limited had

supplied any coal to K Co., which in turn, was supplied to TNEB. Having

regard to these facts, we agree with the Ld. AR that, the flow chart set

out at Page 69 of the assessment order cannot come to the aid of

Revenue because it did not depict the facts as available on record in as

much as it lacked the crucial link between the suppliers and M/s Spring

Traders Limited. There is also merit in the Ld. AR’s contention that, the

hearsay statement of Shri PLA having not been tested on the touchstones

of cross-examination was unsafe to be relied upon. Apart from the

foregoing, it is also observed that there is another missing link in the flow

chart viz., the correlation between the sums transacted through these

bank accounts of foreign entities with the monies found credited in bank

account(s) of the finance firms and / or the entries found noted in the

account books. The Ld. DR also referred to the trail of events set out by

the AO at Para 18.2 of the assessment order, which according to her, also

suggested linkage to the assessee. The Ld. AR, on the other hand,

countered by submitting that the purported trail of events drawn out by

the AO was factually erroneous which did not emanate from the seized

material but was a figment of AO’s own conjecture and surmises. He

pointed out that, the AO had referred to the alleged emails exchanged

and chat messages between Shri CPA, Shri Giri and Shri PLA, which

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 137 ::

according to the AO suggested payment of coal commission on behalf of

the assessee. As already discussed by us above, these emails /

correspondences did not contain any material or evidence which

incriminated the assessee in any manner or related to him. The AO

thereafter is found to have referred to the statement recorded from Shri

CPA on 03.04.2017, which as held above, was untrustworthy and unsafe

to be relied upon. Lastly, the AO has referred to the bank statements of

the several finance firms controlled by Shri CPA, which also does not have

any link or relation with the assessee. The Ld. AR has rightly pointed out

that the trail of events narrated by the AO was his own theory deduced on

whims and suspicion in as much as the same was neither supported nor

backed by any material or corroborative evidence, which we have already

discussed in the earlier paragraphs. Moreover, it is observed that even

this trail of events lacks the crucial link of source wherefrom the monies

came to Shri PLA, Shri Giri or Shri CPA and also the evidence regarding

payment to the assessee. For the above reasons, we find that, the

Revenue has been unable to make out a case that, the value of amounts

transacted or the amount alleged to be commission income of the

assessee had any link or nexus with the coal suppliers or the value of coal

supplied to TNEB. According to us therefore, the searched person [Shri

CPA] had failed to discharge the burden of proof which rested upon them

to rebut the statutory presumption against them and show that the

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 138 ::

source of monies in the bank account(s) of the finance firms did not

belong to him but some other person [coal suppliers as alleged] and that

the entries in the account book(s) relating to withdrawal of the monies did

not pertain to him but some other person [assessee, in this case].

Therefore, as a corollary, the impugned satisfaction drawn by the AO u/s

153C of the Act, on the basis of such dumb material and bald testimonies

was unjustified.

testimonies of the searched persons, it is seen that neither the searched

persons nor the AO could establish the true nature of the transactions and

the motive for routing these monies through Shri CPA, Shri PLA and Shri

Giri. From the discussions made above, it is palpable that Shri CPA was

an influential and resourceful person in his own right. He was engaged in

the business of real estate and financing and was also involved in running

of educational institutions. On analysis of some of the sample notings, it

has been gathered above that the notings in the account books inter alia

comprise of several proprietary business transactions of Shri CPA and the

unaccounted income derived by him is also found to be corroborated by

unaccounted investments unearthed in the course of search. Hence,

according to us, the notings in the seized account books should have been

properly explained by him, which he didn’t, so without dislodging the

statutory-presumption against him, his allegation against assessee fails.

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 139 ::

According to us, the purported linkage sought to be made by the AO on

the basis of acronym ‘RV’ found noted in the account books with the

assessee was meaningless, as no cogent rationale is discernible from the

material(s) which would demonstrate the nature of transactions between

the assessee and Shri CPA and motive behind the same. According to us,

a mere denial by Shri CPA could not have shifted the onus of proof onto

the shoulder of assessee. In order to do so, Shri CPA was required to

corroborate his assertion with independent tangible evidence that links

the nature and motive behind the seized notings with the assessee, which

we find is absent in the present case.

sought to be made out by the Revenue had no logic or rationale, because

the assessee had no role whatsoever in the coal contracts awarded by

TNEB to the coal suppliers. It is seen that, the approval / sanction is given

by the BLTC and board members of TANGEDCO alone which is a separate

legal entity. The details of the persons who held post of the Chairman of

TANGEDCO from 2011 to 2018 was also placed on record and we find

that, the assessee was neither the Chairman nor the member of BLTC or

the Board of TANGEDCO. It was also shown to us that the cabinet was

also not required to accord any approval or sanction to TANGEDCO. The

Ld. AR further narrated the entire tender and bidding process undertaken

by TANGEDCO for awarding coal supply contracts, which was available in

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 140 ::

public domain. He showed that, it was a global tender process for the

period in question and that not only the two coal suppliers in question,

but several other coal suppliers including PSUs were awarded contracts to

supply coal. Having considered these contemporaneous facts, we find that

when assessee has no role in awarding contract to suppliers of Coal, then

question of assessee deriving any ‘quid pro quo’ from suppliers is difficult

to believe unless credible material is brought on record. So, on this count

also the purported allegation against assessee as set-up by Shri CPA &

others fails.

note, the Ld. AR also invited our attention to the enquiry made by the AO

of the assessee from the chairman of TANGEDCO who had provided the

complete details of the global open tender process followed by them along

with the details of the different quantities of coal purchased from several

suppliers. Having gone through the same, it is seen that, apart from K Co

& A Co, TANGEDCO had obtained supply of coal from two public sector

undertakings, viz. MMTC and MSTC and one private supplier, viz. M/s

Chettinad Logistics Pvt Ltd during the same period. It is seen that, the CIF

rate of coal supplies made by these other parties to TANGEDCO during

the same period was commensurate and, in some instances, higher than

the rates at which the A Co & K Co had supplied coal to TANGEDCO. This

contemporaneous data, according to us, negated the case of the Revenue

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 141 ::

that two private suppliers (A Co & K Co) were paying unaccounted

commission for supply of coal, as because there is nothing on record

which shows that, there was any undue benefit being received by A Co &

K Co in the form of higher prices, to justify payment of purported

commission.

offer any proof of linkage or relationship with the assessee and therefore,

any of their averments incriminating the assessee as set-up by Shri CPA

cannot be accepted. As already held above, the tenuous link sought to be

made between the assessee and Shri CPA through Shri Gobi who was a

friend of Shri CPA and a distant relative of the assessee, does not meet

the threshold standard of relevancy, because there is no material or

evidence brought on record from the searches conducted upon Shri CPA

and Shri Gobi to justify such a linkage. Therefore, in absence of any

evidence demonstrating any cogent relationship between the assessee

and the searched persons, it cannot be countenanced that, these

searched persons were conducting such high value transactions on behalf

of the assessee. Hence, after considering the matters before us, and

applying the prudent man’s test by looking through his (the prudent

man’s) eyes, considers the non-existence of such linkage probable and

inclined to act upon the supposition that it does not exist.

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 142 ::

CPA was actively associated with one ‘RVS Trust’ with whom he had

several dealings both through bank and in cash and he also had

transacted with another person named Shri R Vaidialigam. These

contemporaneous facts coupled with our above observations makes it

further unsafe to assume that the notings code worded ‘RV’ could only

suggest the assessee and him alone, particularly when no linkage or

dealing with the assessee qua suppliers of coal was proved by Shri CPA.

searched persons were unable to offer any evidence as to the payment of

purported monies to the assessee. As noted above, the assessee was also

subjected to search and nothing incriminating was found from his

premises. There is no allegation of unearthing of any unaccounted

expenses or unaccounted investments or discovery of any valuable assets

from the possession of the assessee. According to us therefore, without

providing any evidence as to the actual receipt of monies by the assessee,

the bald/hearsay testimonies of the searched person attempting to shift

the ownership of the impugned notings onto the assessee and imposing

addition of more than Rs 500 crores is held to be unjustified.

later on (more than a year after the assessee’s assessment) protectively

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 143 ::

assessed the impugned sum(s) in the hands of Shri CPA as well. He

pointed out that, inspite of making enquiries through FT&TR in relation to

all foreign entities named in the statement(s) of searched persons, the

Revenue was unable gather even an iota of evidence which would suggest

or show any linkage with the assessee. He also showed us that, the

Revenue thereafter, in several cases of the finance firms

controlled/advised/owned by Shri CPA, has again made protective

additions in excess of Rs.247.65 crores on account of the monies credited

in their bank accounts through the entities of Shri PLA viz., for instance,

in the matters of M/s ARM Capital, the income-tax protective assessment

making an addition of Rs.3 crores in AY 2016-17 was completed on

22.09.2021. It was also brought to our notice that, similar protective

addition(s) qua the notings found in account book(s) were also made in

the hands of Shri Gobi. Having regard to these facts, we are reminded of

the legal maxim ‘res ipsa loquitor’ meaning the thing speaks for itself. In

the present context, the actions of the Revenue speak for itself that, they

are still searching for the right person or right source qua the impugned

notings and not having found the same, they were shooting arrows in the

dark in as much as even they were not sure as to whom did these notings

actually pertain to and therefore they taxed the same amount(s) in

several hands.

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 144 ::

parameters as laid down above was met by the AO, which would suggest

that, he had in his possession any material or document found from the

premises of searched person(s) which related to the assessee [third

person] and had a bearing on his total income. We thus answer this

question of fact & law in the negative and allow the legal challenge raised

by the assessee, and hold that the AO’s usurpation of jurisdiction u/s

153C of the Act was invalid, as neither was there any material found in

the course of search which related/pertained to the assessee nor was

there any incriminating material unearthed having a bearing on the total

income of the assessee.

usurp jurisdiction u/s 153C of the Act, against the assessee pursuant to

the search action conducted upon Shri CPA, Shri Giri and Shri PLA, by

relying on the following documents / material, which in his view,

related/pertained/belonged to the assessee and also had a bearing on his

total income.

(i) The account book(s) ID marked ANN/FAY/CPA/B&D/S-1 seized from the premises of Shri CPA; (ii) Email correspondences, phone chats, messages between Shri CPA, Shri Giri and Shri PLA;

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 145 ::

(iii) Agreements and invoices between foreign companies associated with Shri CPA and Shri PLA; (iv) Statements of

Shri CPA, Shri Giri and Shri PLA

As held by us above, the above referred material / documents

cannot be said to contain any information which related to the

assessee or would incriminate him in any manner, by applying the

test of a prudent person. Further, the statement(s) of these persons

have been found to be untrustworthy, self-serving and unreliable,

which does not inspire any confidence. Also, the vital link which

would show that the purported monies received by the finance firms

originated from the coffers of the alleged supplier(s) is absent in the

present case. Even there is no evidence or material adduced which

would suggest that the assessee was the ultimate beneficiary of the

purported monies, whose entries were found in the account

book(s). It is also observed that even subsequent to initiation of

proceedings u/s 153C of the Act, no relevant material or evidence

could be gathered from the independent enquiries made from

FT&TR, TNEB, etc. which would have otherwise justified the initial

satisfaction drawn by the AO. We also note that apart from the

above material, which was relied upon at the time of recording of

satisfaction, no new material or evidence has been brought on

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 146 ::

record by the AO to otherwise support the allegations being levelled

against the assessee. As already held above, the AO has only

prepared flow chart / trail of events, which suffers from factual

infirmities. The AO has further relied upon another letter dated

28.12.2018, filed by Shri CPA retracting his retraction and

reiterating the averments made in his statement(s) dated

03.04.2017 and 10.04.2017. According to us, the entire conduct of

Shri CPA was that of an untrustworthy witness and therefore, it is

imprudent to draw any adverse inference on the basis of his bald

statement(s). Hence, we find that none of the parameters as laid

down above was met by the AO, which would suggest that, he had

in his possession any material or document found from the premises

of searched person(s) which related to the assessee [third person]

and had a bearing on his total income. We thus answer both the

question of existence of jurisdictional fact and the mixed question of

fact and law, in the negative and allow the legal challenge raised by

the assessee. We hold that the AO’s usurpation of jurisdiction u/s

153C of the Act was invalid, as neither was there any material

found in the course of search which related/pertained to the

assessee nor was there any incriminating material unearthed having

a bearing on the total income of the assessee.

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 147 ::

which was recorded by the AO of the assessee on the basis of the

material seized from the premises of M/s CEG Group during the search

conducted upon them 04.01.2017. According to the AO, two loose sheets

ID marked ANN/SAA/KSI/LS/S-1, Pages 48 & 49 was found from the

premises of CEG Group whose title was ‘Power M’. Though there are no

names or specifics or nature of transaction mentioned in these loose

sheets, it is observed that, the inference drawn by the AO in the

satisfaction note was entirely based on the testimony of one Shri SSU,

employee of CEG group, who had stated that the notings on these loose

sheets denoted cash which was paid to Shri Gobi, presumably on behalf of

the assessee. At the cost of repetition, the relevant portion of the

satisfaction, is again reproduced hereunder:-

“5. During the course of search conducted in the case of M/s. Coastal Energy P Ltd and Coastal Energen P Ltd, (M/s. ETA and Buhari Holdings P Ltd. Group) at the residence of Shri. Syed Ameer Ali (an employee of M/s. Coastal Energy P. Ltd.) at No.662/1, 1st Floor, 1st Block, 1st Street, Muthamizh Nagar, Kodungaiyur, Chennai 600118 on 04.01.2017, certain Loose sheets were seized vide Annexure ANN/SAA/KSI/LS/S-1 (Page No.48 & 49), which shows that cash payments have been made to 'Power M' amounting to Rs.41,55,00,000/- during the period from 09.12.2013 to 21.04.2016.

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 148 ::

sheets which were placed at Pages 46 & 47 of the Paper Book Volume IV.

It is seen that, these loose sheets were titled ‘Power M’. The Ld. AR

showed us that, there were several notings across several dates of

purported ‘cash paid’, which was being alleged to pertain to the assessee.

We however observe that, these notings did not contain any name, details

of payer or payee or any other specifics, basis which a prudent person

could suggest that it related to the assessee. Also, there were no sign or

signature or acknowledgment by the assessee, or that, any abbreviation

etc. was mentioned which would suggest the notings to be remotely

relating to the assessee. There is absolutely no mention in the seized

material regarding the nature of the said transactions of cash payments,

the purpose of such payments and the precise identity of such

transaction. A narration made in a loose sheet by a third person with

scanty details cannot be used to fasten tax liability upon the person

whose name does not appear at all. In the absence of any corroborative

evidence to attribute the entries to such a person, such seized material is

liable to be treated as a dumb document, which does not have any

evidentiary value in respect of the entries found therein, unless

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 149 ::

corroborative evidence is available which can provide necessary reliable

basis for deciphering the nature and character of the said entries.

in private notings or sheets or diaries maintained by third parties, without

supporting evidence or linkage to the assessee, constitute “dumb

documents” and cannot be relied upon to fasten tax liability. Unless there

is independent, credible, and corroborative evidence linking such entries

to the assessee, the same are devoid of evidentiary value. Some of the

decisions to this effect are; MM Financiers (P) Ltd Vs. DCIT (2007) 107

TTJ (Chennai) 200, Regency Mahavir Properties Vs ACIT [2018] 169 ITD

35 (ITAT-Mumbai), Mumbai), ACIT Vs. Katrina Rosemary Turcotte [2017]

190 TTJ 681 (ITAT-Mumbai), Mumbai), DCIT Vs. Vipin Aggarwal [2017]

83 taxmann.com 6 (ITAT Chandigarh), S.P Goyal Vs DCIT [2002] 82 ITD

85 (TM) IΠΑΤ, T.S Venkatesan Vs ACIT [2000] 74 ITD 298 (Cal) and

Monga Metals (P) Ltd Vs ACTT [2000] 67 TTJ 247 (All). No corroborative

evidence has been brought on record to demonstrate actual flow of

money. The assessment order also does not refer to any independent

material supporting the alleged payments. Hence, it was of critical

importance for the AO to bring some tangible evidence on record to

corroborate the entries indicating payments in the seized material found

with a third party with specific reference to the fact regarding actual

transfer of money from the said third party to the recipient named in the

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 150 ::

said entries in the seized material. For this, we gainfully rely on the

decision rendered by the ITAT, Mumbai in the case of Riveria Properties

Private Limited Vs ITO in ITA No.250/MUM/2013 where it was held

that, the AO is required to bring further evidence on record to show that,

the money was actually exchanged between the parties in a case, where

there is no other evidence on record to prove that on-money was paid,

except the loose sheet found in the premise of a third party and

admission made by the third party. The relevant part of the said decision

is reproduced as under:

"In the present case on hand, except loose sheet found in the premises of third party and admission made by the third party in their assessment proceedings, there is no other evidence on record to prove that on money is paid. The assessing officer, without brought on record any evidence to prove that on money is exchanged between the parties, merely harping upon the loose sheet and the third party admission, which cannot be considered as conclusive evidence against the assessee to bring on money to tax as undisclosed income. The AO is required to bring further evidence on record to show that actual on money is exchanged between the parties, but literally failed to do so. The A.O. did not conduct any independent enquiry relating to the value of the property instead, merely relied upon the statement given by the purchasers of the property, which is not correct. Further, there is no proof of origin and destination of on money. The A.O failed to prove the source of the purchasers as to how the money was arranged and also failed to prove the deployment of unaccounted money by the seller by any form of evidence. Under these circumstances, based on paper jottings as conclusive evidence on money cannot be brought to tax as income from undisclosed sources."

that, the impugned satisfaction was made out on the basis of 'loose

sheets', which does not come under the ambit and scope of 'books of

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 151 ::

entry' or as 'evidence' under the Indian Evidence Act, Act 1872 and

therefore is not admissible as evidence. For this, we have carefully

examined the law declared by the Hon'ble Apex Court with regard to

acceptance of loose sheets in n the case of V.C. Shukla [1998] 3 SCC

410, 410 wherein at paragraphs 16 to 18 of the judgment, it was

observed as under:

"16. To appreciate the contentions raised before us by the learned counsel for the parties it will be necessary at this stage to refer to the material provisions of the Act. Section 3 declares that a fact is relevant to another when it is connected with the other in any of the ways referred to in the provisions of the Act relating to the relevancy of facts; and those provisions are to be found in Section 6 to 55 appearing in Chapter II. Section 5, with which Chapter II opens, expressly provides that evidence may be given in any suit or proceeding of the existence or non-existence existence of every fact in issue and the facts declared relevant in the aforesaid section, and of no others. Section 34 of the Act reads as under:- "34. Entries in books of account when relevant - Entries in book of account, regularly kept in the course of business, are relevant whenever they refer to a matter into which the court has to inquire but such statements shall not alone be sufficient evidence to charge any person with liability."

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 152 ::

" In its ordinary sense it signifies a collection of sheets of paper bound together in a manner which cannot be disturbed or altered except by tearing apart. The binding is of a kind which is not intended to the moveable in the sense of being undone and put together again. A collection of papers in a portfolio, or clip, or strung together on a piece of twine which is intended to be untied at will, would not, in ordinary English, be called a book...I think the term "book" in S. 34 aforesaid may properly' be taken to signify, ordinarily, a collection of sheets of paper bound together with the intention that such binding shall be permanent and the papers used collectively in one volume. It is easier however to say what is not a book for the the purposes of S. 34, and I have no hesitation in holding that unbound sheets of paper in whatever quantity, though filled up with one continuous account, are not a book of account within the purview of S.34."

it must be held that the loose sheets ID marked ANN/SAA/KSI/LS/S-1,

Pages 48 & 49 cannot be regarded as 'books of accounts' or 'documents'

seized in course of search. We also gainfully refer to the decision of the

Hon'ble Supreme Court in the case of Common Cause (A Registered

Society) Vs Union of India (394 ITR 220)wherein at paragraphs 278

to 282 of the judgment, it has been observed as under:

"278. With respect to the kind of materials which have been placed on record, this Court in V.C. Shukla case has dealt with the matter though at the stage of discharge when investigation had been completed by same is relevant for the purpose of decision of this case also. This court has considered the entries in Jain Hawala Diaries, note books and file containing loose sheets of papers not in the form of "books of accounts"

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 153 ::

and has held that such entries in loose papers/sheets are irrelevant and not admissible under section 34 of the Evidence Act, and that only where the entries are made in the books of accounts regularly kept, depending on the nature of occupation, that those are admissible.

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 154 ::

said, by any stretch of imagination that they were books of account, argued Mr. Sibal. He next contended that even if it was assumed for argument's sake that the above books were books of account relating to a business still they would not be admissible under section 34 as they were not regularly kept. It was urged by him that the words 'regularly kept' mean that the entries in the books were contemporaneously made at the time the transactions took place but a cursory glance of the books would show that the entries were made therein long after the purported transactions took place. In support of his contentions he also relied upon the dictionary meanings of the words 'account' and 'regularly kept'.

Hon'ble Karnataka High Court in the case of DCIT vs. Sunil Kumar

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 155 ::

Sharma (159 taxmann.com 179) which was also seized with the

question that as to whether 'loose sheets' under the Indian Evidence Act,

1872 can be relied upon to usurp jurisdiction u/s 153C of the Act, in

absence of any independent corroboration. The Hon'ble Karnataka High

Court held that the 'loose sheets' does not constitute material evidence in

relation to a third person and therefore set aside the notices issued u/s

153C of the Act, holding it to be void. The relevant findings are as

follows:

"22. The entire allegation is made out on the basis of loose sheets of documents, which does not come under the ambit and scope of 'books of entry' or as 'evidence' under the Indian Evidence Act.

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 156 ::

impugned notices issued under section 153C of the Act, based on the loose sheets/diaries are contrary to law, which require to be set aside in these writ appeals, as the same are void and illegal."

that a sheet of paper containing jottings of amount(s) across several

dates, not shown to form part of the books of accounts regularly

maintained by the searched assessee or his business entities, cannot be

said to constitute material evidence. Following the law declared by the

Hon'ble Court (supra), we are of the considered view that the action

taken by the AO against the assessee based on the material contained in

the impugned ‘loose sheets’ ID marked ANN/SAA/KSI/LS/S-1, Pages 48 &

49 are contrary to the law declared by the Hon’ble Apex Court (supra). In

that view of the matter, the impugned satisfaction note/notice issued

u/s.153C of the Act, based on the loose-sheets are per-se contrary to law,

which action of the AO can’t be countenanced and hold that the “loose-

sheets” [Page No.48-49 supra] can’t be regarded as ‘books of accounts’

or any other ‘document’ to empower the AO of the assessee to usurp

jurisdiction u/s 153C of the Act.

SSU had initially implicated the assessee as the recipient of alleged ‘cash

paid’ found on these loose sheets, but we find that no proof or evidence

was given by him. It is not in dispute that, the impugned ‘loose sheets’

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 157 ::

were found from the possession of one Shri Syed Ameer Ali and the

maker of these entries was one, Shri Ahmed Buhari. According to us

therefore, when the person(s) who prepared these loose sheets and from

whose possession they were found, had not implicated the assessee, the

AO’s action of making additions, without any corroborative material, using

only the bald testimony of an employee, Shri SSU to infer the contents of

these notings was arbitrary and unjustified.

confronted with this statement of Shri SSU and he had denied having

received any payments. Accordingly, the Revenue is found to have

afforded the assessee an opportunity to cross-examine Shri SSU and the

result of the cross-examination, is noted to be as under:-

“Q.2 Did you handle Cash Transaction also?

Ans. No I did not handle the cash transactions other than those recorded in the regular books of accounts of the company.

Q.3 You have stated in your sworn statement dated 07-01-2017 in answer to Q.No.35 that you have handed over some cash to one Shri. Gobi. Do you have any documentary evidence to prove the statement.

Ans. I do not handle the cash transactions. The narration given by the management was only recorded. I have not given any cash or handled any cash and paid to any person. I do not have any documentary evidence for the same.

Q.No.4 With regard to the Loose Sheet Nos.48 & 49 seized on 04.01.2017 as per Annexure ANN/SAA/KSI/LS/S-1 from the residence of Shri. Syed Ameer Ali (employee of M/s. Coastal Energy Pvt. Ltd.), in answer to Q.No.35 of the sworn statement recorded from you u/s 132(4) of the Income Tax Act, 1961 on 07.01.2017, you have stated that a sum of Rs.41.70 crores is the cash received from Coal & Oil LLC,

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 158 ::

Dubai (Rs.17 Cr.) and M/s. Coastal Energen Pvt. Ltd. (24.7 Cr.) and that Rs.41.55 Cr. is the cash payment made to 'Power M'. You have also stated that 'Power M' is the then Electricity Minister of Tamilnadu. You have further stated that the cash will be usually given to his PA, Shri. Gobi. You have also admitted that a sum of Rs.50,00,000/- (paid on 21.04.2016) was given in Delhi through money transfer channel using Isthikar. Please clarify, if you were not handling cash transactions, how did you state in answer to Q.No.35 of statement recorded from you on Oath on 07.01.2017 that cash was usually given to the Electricity Minister's PA Shri. Gobi' Also explain in detail, for what purpose cash of Rs.41.70 Cr. was received and why cash of Rs.41.55 Cr. was paid to the Electricity Minister. Also explain what is Isthikar.

Ans. I am not aware about these transactions as they are not related to M/s. Coastal Energy (P) Ltd. where I used to work. These questions have to be asked to Mr. Ahmed Buhari only. I am not aware about these transactions, neither did I handle this cash, so I took clarification on the same from Mr. Ahmed Buhari and Mr Syed Ameer Ali and have reprodured what has been conveyed by them to me. I am not able to recollect what Isthikar means.”

denied having handled any cash transactions. When enquired as to

whether he had handed over any cash to Gobi, as averred in his original

testimony dated 07.01.2017, he is found to have recanted and denied

having paid any cash to such person. Subsequent to this successful cross-

examination by the assessee, we find that, the Revenue had cross-

examined Shri SSU against his original statement dated 07.01.2017.

Having perused the same, it is seen that, Shri SSU had withstood the

cross-examination and affirmed his retraction to the original statement.

The relevant portion of this cross examination is also set out below:-

“Q.No.10. I am showing you Q.No.22 of the Sworn statement recorded from you u/s 132(4) of the Income Tax Act, 1961 on 07.01.2017 by the Investigation Wing, Chennai and your answer to the question, wherein you have stated as follows:

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 159 ::

"Q.No.22: During the course of search and seizure operations, at the residence of Shri. Ameer Ali at No.662/1, 1st Floor, 1st Block, 1st Street, Muthamizh Nagar. Chennai 600 118 on 04.01.2017, a bunch of loose sheets were found and seized as ANN/SAA/KSI/LS/S-1. I am showing the page No.1 to 133 of the above annexure. Please go through the same and explain the contents.

Ans: I have gone through the pages from 1 to 133 of the materials seized from the residence of Shri. Ameer Ali. I confirm that it is a parallel cash book maintained by Shri Ameer Ali outside the regular books of accounts on my instructions. I reiterate that all the transactions detailed in the above pages are done outside the regular books of accounts. They are explained below

From your statement, it is clear that the entries in the seized Loose sheets including Loose Sheets Nos. 48 & 49 of ANN/SAA/KSI/LS/S-1 on 04.01.2017 have been made only on your instructions and it cannot be inferred or accepted that you were not aware of the transactions reflected in Lie seized loose sheets. Further, in your statement recorded on 07.01.2017, you have explained in detail all the transactions figuring in the seized loose sheets from page 1 to page 133 which includes Loose Sheet Nos.48 & 49. Please explain the contradiction in the sworn statement given by you on 07.01.2017 and the present sworn statement.

Ans. As mentioned earlier in my statement, I have never been responsible for maintaining books of accounts outside of the regular books of accounts. These loose sheets seem to have been maintained on instructions from Mr. Ahmed Bhari as all transactions pertaining to the sam, are not the regular genuine book transactions of the company. As I understand, these seem to be personal transactions of Mr. Ahmed Buhan.

I was under lot of mental strain and stress and was pressurized into accepting the facts put before me. The transactions which I explained were based on the explanations given by Mr. Ahmed Buhari to me.

Q.No.15. As it is seen that you are contradicting the statement given by you earlier on 07.01.2017, please clarify, how did you clearly depose in that cash was usually given to the Electricity Minister's PA Shri. Gobi and a answer to Q.No.35 of statement recorded from you on Oath on 07.01.2017 sum of Rs. 50,00,000/- paid on 21.04.2016) was given in Delhi through money transfer channel using Isthikar. Please also explain as to what basis or proof are in possession of with regard to the

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 160 ::

contradiction in your present statement from the statement given earlier by you.

Ans. As mentioned earlier. I was not handling the cash and hence I was not privy to the transaction. Hence, no proof is available with me. The information given in the earlier statement on 07.01.2017 was the information provided to me by Mr. Ahmed Buhari

Q.No. 16. After a lapse of more than 2 and 4 years after deposing in the sworn statement recorded from you dated 07.01.2017, you have denied knowledge of the transactions reflected in Loose Sheet Nos. 48 & 49 on the Cash payments made to Power M. Considering that considerable time has elapsed since your statement made under oath on 07.01.2017, your present statement retracting or denying knowledge of the cash transactions at this point in time can only be construed as an afterthought. What do you have to say on this?

Ans. The statement was recorded in January 2017 and till date I have not asked for the copies of the statement which I made. Also, due to assessment in the case of Shri. Natham R. Viswanathan, I was called upon as evidence which has resulted in me giving a fresh statement after recollecting the events which had earlier taken place and hence I wish to state that my statement is not an afterthought.”

upon cross examination by the assessee, and he had also withstood the

cross-examination of the Revenue. Shri SSU had made it abundantly clear

that, he had not paid any cash to the assessee or Shri Gobi. As a

consequence, we are of the considered view that, the original testimony

of Shri SSU had lost its evidentiary value, and thus the AO was unjustified

in relying upon the same to justify the incomprehensible notings found on

loose sheets ID marked ANN/SAA/KSI/LS/S-1, Pages 48 & 49 to be

pertaining the assessee, in his satisfaction recorded u/s 153C of the Act.

CEG Group was making the impugned payments to the assessee. It is not

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 161 ::

in dispute that CEG Group did not have any transactions with TNEB in as

much as it did not supply any coal during this period. This

contemporaneous fact is discernible from the details furnished by the

Chairman of TANGEDCO, which is found reproduced at Pages 34 to 39 of

the assessment order. The Revenue has been unable to establish the

fundamental principle of reciprocity. We find that, no quid pro quo has

been shown as to why the impugned alleged payment was made by CEG

Group and what did they allegedly receive in consideration from the

assessee. In absence of these corroborative details, coupled with the

retraction of Shri SSU, we hold that the satisfaction recorded by the AO

[Paras 5 to 7 of his satisfaction note] by referring to the notings found in

‘loose sheets’ ID marked ANN/SAA/KSI/LS/S-1, Pages 48 & 49 was based

on guesswork and conjectures. There is nothing shown to us to establish

the veracity of the same with corroborative evidence or by bringing

cogent material on record to back the same. We find that the Revenue

has failed to satisfy the condition precedent set out in Section 153C for

recording this satisfaction and thus we hold it to be bad in law.

up by the AO for AYs 2014-15 to 2016-17 stands rendered bad in law and

consequently the usurpation of jurisdiction u/s 153C of the Act is held to

be null and void. In so far as AY 2017-18 is concerned, as noted earlier,

the satisfaction note for the relevant year contained separate reference to

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 162 ::

certain material, which was seized in the course of search conducted at

third party, Shri PJR, which according to the AO, had bearing on the

assessee’s total income for AY 2017-18. According to the satisfaction

note, the AO was of the view that the seized material contained

information of unaccounted cash expenses of Rs.28,55,86,500/- incurred

by the assessee. It was brought to our notice that, this satisfaction of the

AO emanated from the satisfaction drawn by the AO of Shri PJR before

transmitting the relevant seized material to the AO of the assessee.

Having gone through the satisfaction of the AO of Shri PJR, it is seen that,

the following seized material was inferred to be possibly pertaining to the

assessee.

• Annexure ANN/RB/PJ/LS/5-2, Page Nos. 12 to 118 – These are loose sheets dated 10.05.2016 which inter-alia include name of polling booths, details of booth-wise voters etc., relating to State Assembly Election. • Annexure ANN/RB/PJ/LS/S-1 :- This is noted to be a pocket diary in which details of main places of Athoor constituency, number of voters available in the said places, name of persons with mobile numbers, in- charge of each polling booth have been noted. • ANN/RB/PJ/LS/S-2, Page 11 & 8 to 10 – This is found to be an unsigned affidavit to be furnished by election candidate before the Returning Officer for election to Tamil Nadu Legislative Assembly from Natham prepared in the name of the assessee. • Loose Sheet titled Annexure ANN/RB/PJ/LS/S-1 – These contains entries as 'RVN Varavu', 'RECEIPTS RVN 35’ which is suspected to denote payment of Rs.35,00,000/- by the assessee. • Loose Sheet, Page No. 10 of Annexure- ANN/RB/PJ/LS/S-1 – This page contains details of panjayath polling booth numbers, under Reddiyar Chathiram along with a column for name & signatures

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 163 ::

that, the allegation of assessee having incurred cash expenses is found to

be based primarily on suspicion and guess work. We observe that, the

pocket diaries of Shri PJR contained the details of polling booths and

voters etc. of several constituencies in the State inter alia including

Athoor wherefrom the assessee had contested the elections. Separately,

there were certain loose sheets which contained rough jottings of several

numbers and calculations, which according to AO, were estimations of the

number of voters in the constituencies and the expected amount(s) to be

paid to them. It is seen that, in none of these diaries or loose sheets was

there any mention of the assessee. It is also not a case that, the

assessee’s name featured anywhere in these diaries or that he had signed

or acknowledged any of these loose sheets or pages in the pocket diaries.

It is seen that, the AO had found two loose sheets where it was scribbled

'RVN Varavu', 'RECEIPTS RVN 35’. Also, an unsigned affidavit to be

furnished by an election candidate to the returning officer in the name of

the assessee was found. The AO therefore linked the assessee to the

rough jottings of several numbers and calculations made by Shri PJR in

his pocket diaries and suspected that the notings must pertain to the

assessee, who would have possibly paid cash through Shri PJR to the

voters during elections. The satisfaction recorded by the AO of Shri PJR

shows that, only because the assessee had contested elections during the

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 164 ::

year, led him to believe that, ‘there is every possibility that the money

spent for election belongs to Shri Natham R. Viswanathan’. We thus

observe that, the tone and tenor of the satisfaction recorded by the AO of

Shri PJR suggested surmises, instead of any tangible or corroborative

material.

the two pocket diaries(s) seized from the premises of Shri PJR viz.,

Ann/RB/PJ/ LS/ S-2, Pages 12-118 & Ann/RB/PJ/ LS/S-1, Pages 11-39.

Having perused these diaries, which is found placed at Pages 48 to 97 of

Paper Book Vol IV, we find that these were rough jottings & scribblings of

several numbers, calculations, estimations etc. For instance, some of the

pages contained the names of polling booths, booth wise number of

voters etc., and there were separate columns for in charge/signature etc.

Evidently no monetary or financial transaction was discernible from these

pages. The Ld. AR has rightly pointed out that, these details were a

matter of fact which was easily accessible in public domain. According to

Ld. AR, it is common for older persons to know who are interested in the

election process, to keenly gather details of various kinds for the purpose

of monitoring elections. He thus submitted that, these data was

apparently general in nature and there was nothing incriminating

contained therein. Moreover, we observe that, several of these pages only

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 165 ::

contained rough scribblings having no discernible meaning. For the ease

of understanding, some of these pages are extracted below:-

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 166 ::

do they mention any identifiable particulars connecting the noting to the

assessee. It is not the case of the Revenue that the handwriting

appearing on the seized loose sheets belongs to the assessee. According

to us therefore, the contents of the above seized material was ex-facie

dumb in nature and the purported linkage sought to be made by the

Revenue to the assessee bordered on absurdity. The Ld. AR has also

brought to our notice the statement given by the searched person [Shri

PJR] u/s 132(4) of the Act on 07.01.2017, when he was confronted with

these pocket diaries. It is observed that, Shri PJR had explicitly stated

that, these were mere estimates and assumptive calculations. It is seen

that, Shri PJR was again interrogated on 19.07.2017 & 20.11.2018 u/s

131 of the Act. We observe that, Shri PJR had at all times dismissed these

rough notings as estimations done for his own academic interests. He had

also clearly stated that, they were not notings of actual cash payments

and that no cash was paid or received though him. The relevant excerpts

from his statement(s) are reproduced hereunder:-

“Statement dated 17.07.2017 Q8. As per Der your reply to above question regarding page no. 5, you had stated that that page contains details of contract work. But as per your reply regarding pages 8-39 and the Number mentioned in that pages, it is understood that you answer is not revealing the true facts. I am giving you one more opportunity to explain the same. Ans. Page No. 5 explains the assumption of expenditure which may occur in constituency assembly election in Dindigul District. During election period, I read the newspaper that the major political parties are

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 167 ::

paid Rs. 250/- per voters to get the vote in their favours. Based on that, in the Page No 32 to 37 I had written the total no of voters in constituency wise and estimation of payments to voters. I had written the above details in the page no. 5 and cumulatively totaled estimated expenditures around 28.5 crores.

Q10. Now I am showing you the page no.12 of folder containing loose annexure sheets serially numbered (1) to (39) seized vide Ann/RB/PJ/LS/S No.3 dated 10/05/2016. Please go through this and offer your explanation.

Ans. This page contains the details of same estimated expenditures as mentioned in the page no. 32 to 37 and there is small revision in the estimation which is written on this page in front and back.

Q11. Based on your reply to question no. 8 to 11, It is crystal clear that you had made the payments to the voters to get votes in the favour of your related person because your projection were revised and made final in the page no. 12 which means the above stated figures are not projection whereas the actual payments paid by you or your family friend Shri Natham R Vishvanathan. Please state why not the payment of Rs. 28.5 crores may not be treated as your/ your family friend Shri Natham R Vishvanathan's unaccounted income.

Ans. I am reconfirming the reply to question no. 8 to 11 that it is only projection of expenditures. Actual expenditures have not made.

Statement dated 19.07.2017

Q.17. On 17-07-2017 you had given a statement. In continuation of that, I am showing you loose sheets serially numbered 1 to 39 seized vide Annexure ANN/RB/PJ/LS/S Dated 10-5-2016. Please go through the page No.5 and offer your explanation.

Ans. As I already stated these are the estimation figures in the case of constituency assembly election in Dindigul District.

Q.19.In the same page(No.5), seized vide Annexure ANN/RB/PJ/LS/S Dated 10-5-2016, you have deducted 123890500 from the total of 285586500 and further you have deducted 34191000 and further deducted R4000000 and finally arrived 123505000, which means you have made the payments and deducted, otherwise without transaction or movement of cash there is no possibility to deduct the amount from the total if it is a mere estimation. Please offer your explanation.

Ans. First of all I deny the payment made by me. Based on the newspaper projection, initially I estimated for total number of voters would be a final total ie. Rs.28.5586,500/-, but after doing all the permutation and combination, I finally arrived the figure around Rs. 12 crore. This would be the actual money distribution to be the voter. This is only the assumption.

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 168 ::

Q.22. Please explain about the notings at Page No.32, seized vide Annexure ANN/RB/PJ/LS/S Dated 10-5-2016. Ans: Natham means Natham constituency. 180930 denotes the total number of voters in the constituency. 4,52,32,500 denotes if the political parties paid to the voters @Rs.250/- per head, the total amount would be Rs.4,52,32,500/-. I do not remember the person owning the mobile no. noted in the sheet. 133. It is a matter of ordinary understanding that, the contents of any

seized material can be explained only by the maker of these documents

or the person from whose possession it is found. On a stand-alone basis,

the contents of the seized material is found to be vague and dumb and no

cogent meaning can be discerned on a plain reading of the same. More

particularly, these notings/jottings, considered on stand-alone basis, does

not in any manner suggest any cash payments by the assessee through

the searched person [Shri PJR]. According to us therefore, ordinarily, it

was for the searched person to explain the nature of these notings. It is

to be kept in mind that, the presumption u/s 132(4A) and 292C qua the

ownership of these entries is against the searched person. However, if the

searched person intends to rebut this presumption and suggests that they

pertained to someone else, then he is required to bring on record some

corroborative and tangible evidence to prove the same. In the present

case however, we find that, the searched person [Shri PJR] has nowhere

suggested or implicated the assessee. Rather, he is found to have

explained that the notings were made by him for his own personal

consumption and that they were estimations and assumptions drawn in

rough. We find that, though the Revenue interrogated him on several

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 169 ::

occasions but the searched person [Shri PJR] did not reveal or suggest

anything which could even remotely link the rough scribblings to the

assessee.

notings of 'RVN' suggested the assessee was nothing but a wild guess

without any basis. The Ld. AR brought to our notice that, the searched

person [Shri PJR] had confirmed that the scribblings of 'RVN Varavu' &

'RECEIPTS RVN 35’ did not relate or pertain to the assessee. Indeed, the

AO is entitled to interpret notings in a plausible manner, but that cannot

substitute the discovery of fact to implicate any ‘other person’, other than

the person searched. We thus agree with the Ld. AR that, it was

incumbent upon the AO to first establish the identity of the person qua

such notings with proof of linkage, in order to assume jurisdiction u/s

153C of the Act. It is seen that, though the impugned satisfaction was

recorded almost two years after the search was carried out in Shri PJR,

but we find that, the AO was unable to bring on record any corroborative

evidence to support his guess-work.

ANN/RB/PJ/LS/S-2, Page 11 & 8 to 10 is concerned, we agree with the Ld.

AR that, this document had no evidentiary value. Firstly, there was no

signature or acknowledgment of the assessee and therefore it cannot be

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 170 ::

assumed to pertain to him, secondly, the contemporaneous fact is that,

the assessee never contested election from Natham Constituency that

year to which the affidavit related to, and therefore evidently it could not

have any relation to the assessee. Most importantly, this unsigned

affidavit on stand-alone basis had no significance or relevance in the

context of the present case, as no prudent person could have possibly

linked the same to the rough jottings found in pocket diaries and treat it

as a sufficient linkage that the notings related to the person named in this

unsigned affidavit.

two scribbling of 'RVN Varavu' & 'RECEIPTS RVN 35’ and the unsigned

affidavit constitutes a non sequitur, resting upon a flawed premise that

attempts to conflate unconnected and substantively different factual

matrices. The alleged inferences sought to be drawn is found to be

speculative, remote, and based on assumptions rather than demonstrable

proof, rendering the resulting conclusion conjectural and without

foundation in law or logic. In our view therefore, any satisfaction

predicated on this tenuous and inappropriate comparison must be

disregarded for lack of essential evidentiary value and relevance.

on stand-alone basis does not suggest that it relates to the assessee and,

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 171 ::

even the statement of searched person from whose possession it was

found, does not implicate the assessee, the AO’s satisfaction qua these

notings against the assessee, is found to be nothing but a fanciful notion

san any supporting material or evidence and is thus held to be bad in law.

raised by the assessee, and hold that the action of AO to invoke section

153C of the Act was without jurisdiction as neither was there any material

found in the course of search which related/pertained to the assessee nor

was there any incriminating material unearthed having a bearing on the

total income of the assessee. Therefore, the impugned action of AO to

issue notice u/s. 153C of the Act is null in the eyes of law and therefore

ab-initio void and so the assessment order impugned before us is

quashed.

addition(s) of Rs.547 crores in the hands of the assessee, other than the

material discussed above, the AO has brought in only two pieces of

material viz., (i) reply from TANGENCO providing the details/rates at

which coal was supplied by several parties and (ii) letter dated

28.12.2018 filed by Shri CPA, retracting the retracted-statement dated

09.05.2017 and thereby took a somersault of the position taken in the

sworn affidavit. According to Ld AR, either Shri CPA’s Statement given

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 172 ::

under section 132(4) at the time of search corroborated by sworn

affidavit should be correct or his statement given accusing assessee given

after an year of search should be correct, but, both cannot be true. Be

that as it may, since we are not inclined to examine the merits of the

addition(s) since we have already allowed the legal issue above and have

already held the usurpation of jurisdiction u/s 153C of the Act to be

invalid for failure to satisfy the condition precedent laid down therein and

quashed the assessment orders impugned before us, the grounds agitated

by both sides against the merits of the addition(s) have been rendered

academic in nature.

2017-18 shall apply mutatis mutandis to the other appeals in ITA

Nos.1321 to 1323, 1556 & 1597/Chny/2025 for AYs 2014-15 to 2016-17.

Accordingly the legal ground raised in these appeals are allowed and the

assessment order(s) are held to be vitiated in law due to invalid

usurpation of jurisdiction by the AO u/s 153C of the Act.

the Act to be invalid for failure to satisfy the condition precedent laid

down therein and quashed the notice issued u/s 153C of the Act against

the assessee, the assessment orders are held to be non-est in the eyes of

law, the grounds agitated by both sides against the merits of the

ITA No.1321/Chny/2025 & Others R. Viswanathan :: 173 :: addition(s) have been rendered academic in nature. Before parting, it may be clarified that, we have not looked into the merits of issues emanating from the assessment order(s), and therefore the challenge raised on merits as well as other legal issues are left open.

Order pronounced on the 22nd day of January, 2026, in Chennai.

Sd/- Sd/- (एस. आर. रघुनाथा) (एबी टी. वक�) (S.R.RAGHUNATHA) (ABY T. VARKEY) लेखा सद�य/ACCOUNTANT MEMBER �याियक सद�य/JUDICIAL MEMBER

चे�ई/Chennai, �दनांक/Dated: 22nd January, 2026. TLN आदेश क� �ितिलिप अ�ेिषत/Copy to: 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकरआयु�/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF